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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 12 Months Ended
Dec. 31, 2025
Summary of Derivative Instruments [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Objectives and Strategy
We utilize derivative instruments—including interest rate swaps, futures, options, foreign exchange and commodity contracts, credit derivatives, and various customer-facing products—to manage interest rate, foreign exchange, commodity, credit, and other market risks. Our objective is to reduce volatility in interest income, interest expense, earnings, and capital. These instruments enable us to adjust the sensitivity of our assets and liabilities to changes in market rates and other market conditions. We also offer derivatives to customers to support their risk management needs, with the related exposures generally offset through dealer or clearing house transactions. We do not use derivatives for speculative purposes.
Accounting for Derivatives
All derivatives are measured at fair value and included in “Other assets” or “Other liabilities” on the consolidated balance sheet. We have executed International Swaps and Derivatives Association, Inc. (“ISDA”) master netting agreements, or similar arrangements, with substantially all of our derivative counterparties. These agreements provide rights of offset for derivative assets and liabilities, as well as the ability to liquidate collateral, in the event of counterparty default or other specified circumstances.
For balance sheet presentation purposes, derivatives are reported on a gross fair value basis, even when legally enforceable netting agreements are in place. Related cash flows are classified as operating activities within the consolidated statement of cash flows unless a derivative instrument contains an other-than-insignificant financing element at inception. In such cases, the cash flows are classified as financing activities. For more discussion of the methodologies used to estimate the fair values of derivatives, see Note 3.
The accounting treatment for changes in derivative fair values depends on their intended use and designation under applicable accounting standards. For derivatives used to manage interest rate risk, including those in qualifying hedging relationships, gains and losses are recognized in interest income or interest expense within the same income statement line item as the hedged item or transaction. Changes in the fair values of customer-facing derivatives, the corresponding offsetting derivatives, and other derivatives used in risk-management activities that do not qualify for hedge accounting are recorded in current-period earnings within noninterest income or noninterest expense.
Derivatives Designated in Qualifying Hedging Relationships
To qualify for hedge accounting, a derivative must be highly effective in reducing the designated risk, and the hedging relationship must be formally documented at inception. Formal documentation includes identification of the hedging instrument and the hedged item, the risk management objective and strategy, and the methodology for assessing hedge effectiveness both initially and on an ongoing basis. We primarily use regression analysis to assess effectiveness, comparing changes in the fair value or cash flows of the derivative to those of the hedged item or transactions for the specified risk.
If a hedge ceases to be highly effective, hedge accounting is discontinued, and subsequent changes in the derivative’s fair value are recognized in current-period earnings. For discontinued fair value hedges, any remaining basis adjustments to the hedged item are amortized into interest income or interest expense over the item's remaining life. For discontinued cash flow hedges, amounts deferred in AOCI are reclassified into earnings over the originally designated hedge term unless it becomes probable that the forecasted transactions will not occur, in which case the deferred amounts are immediately reclassified into earnings.
Fair Value Hedges — We use interest rate swaps to hedge changes in the fair value of fixed‑rate assets and liabilities attributable to benchmark interest rate risk, effectively converting those exposures to floating rates. At December 31, 2025, all fair value hedges designate the Secured Overnight Financing Rate (“SOFR”) benchmark component of contractual coupon cash flows as the hedged risk. The swaps are structured so that their critical terms align with those of the hedged items, supporting hedge effectiveness. For qualifying fair value hedges, changes in the fair value of both the derivative and the hedged item attributable to the hedged risk are recognized in current‑period earnings, with the resulting adjustment to the hedged item recorded as a basis adjustment to its carrying amount.
•Fair Value Hedges of Liabilities — We designate interest rate swaps as fair value hedges of fixed‑rate long‑term debt, with changes in the fair value of the swaps generally offsetting changes in the fair value of the hedged debt. We also continue to amortize the basis adjustments associated with a previously terminated fair value hedge that matures in 2029. For additional information, see Note 13.
•Fair Value Hedges of Assets — We designate interest rate swaps as fair value hedges of fixed-rate commercial loans and AFS securities, utilizing both the portfolio layer method (ASU 2022-01) and specific-identification strategies. Changes in the fair value of the related swaps generally offset changes in the fair value of the hedged assets.
Cash Flow Hedges — We use interest rate derivatives to mitigate variability in expected future cash flows associated with forecasted transactions, including interest receipts on floating‑rate commercial loans and interest payments on floating‑rate debt. For qualifying cash flow hedges, changes in the fair value of the hedging instrument are deferred in AOCI until the hedged transactions affect earnings. Ineffectiveness in cash flow hedges is not measured or separately disclosed. Net losses deferred in AOCI from previously terminated cash flow hedges continue to be amortized into interest income on a straight-line basis through the hedges’ original maturity dates, provided the forecasted transactions remain probable.
Collateral and Credit Risk
Credit risk on derivatives arises from the potential for counterparty nonperformance. We mitigate this risk by centrally clearing eligible derivatives and transacting with well-capitalized financial institutions. For non-cleared derivatives, we use ISDA master agreements with Credit Support Annexes (“CSA”) that define eligible collateral types and margin requirements. Collateral and exposure levels are monitored daily. At December 31, 2025, all variation margin posted or received under CSA collateral terms was in cash. We pledged approximately $20 million in cash collateral for variation margin and $200 million in U.S. Treasuries to satisfy initial margin requirements with certain dealer counterparties and central clearing houses. Credit risk on customer-related positions is managed through underwriting, collateral sharing, guarantees, and credit limits. No significant derivative-related losses due to counterparty default occurred during 2025. We measure counterparty credit risk by calculating and incorporating a CVA in the fair values of our derivatives. CVA reflects the value of nonperformance risk for both our counterparties
and the Bank. Periodic changes in CVA are recognized in current-period earnings in “Capital markets fees and income” on the consolidated statement of income.
Certain derivative contracts contain credit risk-related contingent features, such as the minimum credit rating requirements. If such a feature were triggered, additional collateral may be required; however, counterparties have not always demanded additional collateral when permitted to do so historically. If our credit rating had been downgraded one notch by Standard and Poor’s (“S&P”) or Moody’s at December 31, 2025, it is unlikely that additional collateral would have been required to be pledged. Centrally cleared derivatives do not have credit risk-related features that require additional collateral in the event of a credit rating downgrade.
Derivative Notional Amounts and Gross Fair Values
The following schedule presents derivative notional amounts and recorded gross fair values at December 31, 2025 and 2024:
December 31, 2025December 31, 2024
Notional
amount		Fair valueNotional
amount		Fair value
(In millions)Other
assets		Other
liabilities		Other
assets		Other
liabilities
Derivatives designated as hedging instruments:
Cash flow hedges:
Hedges of floating-rate assets 1
$2,750 $7 $1 $550 $— $2 
Hedges of floating-rate liabilities— — — 500 — — 
Fair value hedges:
Hedges of fixed-rate assets 1
7,653 79 — 4,668 93 — 
Hedges of fixed-rate liabilities1,000 — — 500 — — 
Total derivatives designated as accounting hedges11,403 86 1 6,218 93 2 
Derivatives not designated as accounting hedges: 2
Customer interest rate derivatives22,428 251 241 16,833 348 346 
Customer commodity derivatives853 18 17 — — — 
Other interest rate derivatives 4
5,571 2 — 1,105 1 — 
Foreign exchange derivatives 3
308 3 1 373 4 2 
Purchased credit derivatives64 — — 24 — — 
Total derivatives not designated as accounting hedges
29,224 274 259 18,335 353 348 
Total derivatives$40,627 $360 $260 $24,553 $446 $350 
1 Includes forward-starting swaps that are not yet effective.
2 Notional amounts and fair values for derivatives that are not designated as accounting hedges include both the customer-facing derivatives the Bank executes to assist customers in managing their risks and the offsetting dealer-facing derivatives that economically mirror the corresponding customer transactions to mitigate the Bank's exposure.
3 Includes both spot and forward FX trades.
4 Other interest rate derivatives at December 31, 2025 include certain short-dated interest rate futures used as economic hedges of floating-rate loans that are not designated as hedges for accounting purposes.
Hedge Accounting Gains/Losses Recognized in Earnings and Deferred in AOCI
The following schedules present the gains and losses from derivative instruments designated as cash flow and fair value hedges, either deferred in AOCI or recognized in earnings for years ended December 31, 2025 and 2024:
Year Ended December 31, 2025
(In millions)Effective portion of derivative gain/(loss) deferred in AOCIAmount of gain/(loss) reclassified from AOCI into incomeInterest on fair
value hedges		Hedge ineffectiveness / AOCI reclass due to missed forecast
Cash flow hedges: 1
Hedges of floating-rate assets$7 $(66)$— $— 
Hedges of floating-rate liabilities— 1 — — 
Fair value hedges: 2
Hedges of fixed-rate assets— — 52 — 
Hedges of fixed-rate liabilities— — (11)— 
Total derivatives designated as accounting hedges
$7 $(65)$41 $— 
Year Ended December 31, 2024
(In millions)Effective portion of derivative gain/(loss) deferred in AOCIAmount of gain/(loss) reclassified from AOCI into incomeInterest on fair
value hedges		Hedge ineffectiveness / AOCI reclass due to missed forecast
Cash flow hedges: 1
Hedges of floating-rate assets$(8)$(126)$— $— 
Hedges of floating-rate liabilities4 8 — — 
Fair value hedges: 2
Hedges of fixed-rate assets— — 88 (1)
Hedges of fixed-rate liabilities— — (8)— 
Total derivatives designated as accounting hedges
$(4)$(118)$80 $(1)
1 For the 12 months following December 31, 2025, we estimate that approximately $29 million of net losses from both active and terminated cash flow hedges will be reclassified from AOCI into interest income, compared with an estimate of $63 million at December 31, 2024. At December 31, 2025, approximately $37 million in losses related to terminated cash flow hedges remained deferred in AOCI, which are expected to be fully reclassified into earnings by October 2027.
2 We recorded cumulative unamortized basis adjustments from terminated fair value hedges of debt totaling $32 million and $39 million at December 31, 2025 and 2024, respectively. Additionally, we had $3 million of cumulative unamortized basis adjustments from terminated fair value hedges of assets at both December 31, 2025 and 2024. Interest on fair value hedges presented above includes the amortization of the remaining unamortized basis adjustments.
Gains/Losses Recognized in Earnings from Derivatives Not Designated as Accounting Hedges
The following schedule presents the amount of gains (losses) recognized in “Capital markets fees and income” under noninterest income from derivatives not designated as accounting hedges:
Other Noninterest Income/(Expense)
(In millions)20252024
Derivatives not designated as hedging instruments:
Customer-facing interest rate derivatives
$30 $30 
Customer-facing commodity derivatives
1 — 
Other interest rate derivatives 1
— 1 
Foreign exchange derivatives30 29 
Purchased credit derivatives(1)— 
Total derivatives not designated as hedging instruments
$60 $60 
1 This line also includes gains and losses from mortgage derivatives that were recorded in “Loan-related fees and income” under noninterest income.
Fair Value Hedges and Hedged Items Gains/Losses
The following schedule presents derivatives used in fair value hedge accounting relationships, including the pre-tax gains and losses recorded on both the derivatives and the corresponding hedged item for the periods presented:
Gain/(loss) recorded in income
Twelve Months Ended
December 31, 2025		Twelve Months Ended
December 31, 2024
(In millions)
Derivatives 2
Hedged itemsTotal income statement impact
Derivatives 2
Hedged itemsTotal income statement impact
Hedges of fixed-rate assets 1, 2
$(109)$109 $— $108 $(109)$(1)
Hedges of fixed-rate liabilities 1, 2
16 (16)— (7)7 — 
1 Includes hedges of benchmark interest rate risk for fixed-rate long-term debt, AFS securities, and commercial loans. Gains and losses were recorded in interest expense or income consistent with the hedged items.
2 The income/expense for derivatives does not reflect interest income/expense from periodic accruals and payments to be consistent with the presentation of the gains/(losses) on the hedged items.
Fair Value Hedges and Basis Adjustments
The following schedule presents information regarding basis adjustments for hedged items in fair value hedging relationships:
Par value of hedged itemsCarrying amount of the hedged itemsCumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items
(In millions)202520242025202420252024
Hedges of fixed-rate assets 1, 2
$11,566 $11,388 $11,383 $11,099 $(183)$(289)
Hedges of fixed-rate liabilities 1
(1,000)(500)(1,009)(493)(9)7 
1 Carrying amounts exclude (1) issuance and purchase discounts or premiums, (2) unamortized issuance and acquisition costs, and (3) amounts related to terminated fair value hedges.
2 Hedged items include defined portfolios of AFS securities and commercial loans, as well as specifically identified AFS securities. The related basis adjustments were recorded in the same balance-sheet lines as the associated hedged assets. At December 31, 2025, the amortized cost basis of assets designated under the portfolio layer method was $9.6 billion. The cumulative basis adjustment associated with these hedging relationships was $29 million, and the notional amounts of the designated hedging instruments totaled $5.7 billion.