We utilize various financial instruments, including loan commitments, commercial letters of credit, and standby letters of credit, to support our customers’ financing needs. These instruments expose us to varying degrees of credit, liquidity, and interest rate risk that are not fully reflected on the consolidated balance sheet. The associated credit risk is evaluated and recorded as a reserve for unfunded lending commitments, which is presented separately on the consolidated balance sheet.


	December 31,
(In millions)	2025		2024

Unfunded lending commitments 1	$	29,286	$	28,767
Standby letters of credit:
Financial	643		574
Performance	288		262
Commercial letters of credit	27		15

Total unfunded commitments	$	30,244	$	29,618

Loan commitments are agreements to extend credit to customers subject to specified conditions. These commitments generally have fixed expiration dates or other termination provisions and may require the payment of a fee. The amount of collateral obtained, if deemed necessary at the time the credit is extended, is based on our initial credit evaluation of the counterparty. Collateral types vary and may include accounts receivable, inventory, property, plant and equipment, and income-producing properties.

While loan commitments exposes us to credit risk, a significant portion is expected to expire without being drawn. At December 31, 2025, we had $8.2 billion of commitments scheduled to expire in 2026. We apply the same credit policies and procedures to loan commitments and other off-balance sheet obligations as we do to on-balance sheet instruments, including credit approvals, limits, and ongoing monitoring.

We issue standby and commercial letters of credit as conditional commitments to guarantee a customer's performance to a third party. These guarantees primarily support public and private borrowing arrangements, such as commercial paper programs, bond financing, and similar transactions. At December 31, 2025, standby letters of credit totaled $931 million, all of which are scheduled to expire in 2026. The credit risk associated with issuing letters of credit is comparable to that of extending loans to customers, and we typically hold marketable securities and cash equivalents as collateral.

Certain mortgage loans sold include limited recourse provisions for periods ranging from three months to one year. Losses arising from the exercise of these provisions have not been significant.

We are involved in various legal proceedings or governmental inquiries, which may include litigation in court, arbitration, investigations, examinations, and other actions initiated or considered by governmental and self-regulatory agencies. These matters may relate to lending, deposit, and other customer relationships; supplier and contractual issues; employee matters; intellectual property disputes; personal injury and other tort claims; and regulatory or legal compliance issues. While many of these matters involve individual claims, we are also subject to putative class action claims and other broader claims.

Governmental and self-regulatory proceedings, investigations, examinations, and related actions may concern our banking, investment advisory, trust, securities, and other products and services; our customers’ involvement in money laundering, fraud, securities violations, and other illicit activities; or our policies and practices regarding

such customer activities. They may also involve our compliance with the wide range of applicable banking, securities, and other laws and regulations. At any given time, we may be responding to subpoenas and requests for documents, data, or testimony and engaging in discussions to address or resolve these matters.

•Two civil cases, Lifescan Inc. and Johnson & Johnson Health Care Services v. Jeffrey C. Smith, et. al., brought against us in the United States District Court for the District of New Jersey in December 2017, and Roche Diagnostics and Roche Diabetes Care Inc. v. Jeffrey C. Smith, et. al., brought against us in the United States District Court for the District of New Jersey in March 2019. In these cases, certain manufacturers and distributors of medical products seek to hold us liable for allegedly fraudulent practices of a borrower of the Bank who filed for bankruptcy protection in 2017. Discovery is substantially complete for most parties. However, final rulings on certain dispositive motions remain outstanding, and other dispositive motions have yet to be filed or ruled upon. Both cases have been set for trial in April 2027.

Based on our current knowledge, we believe that the estimated liabilities for litigation and other legal actions and claims, as reflected in our accruals and determined in accordance with applicable accounting guidance, are adequate. We also currently believe that any liabilities in excess of the amounts accrued, if any, arising from litigation and other legal actions and claims for which a loss is estimable, would not have a significant impact on our financial condition, results of operations, or cash flows. However, given the substantial uncertainties inherent in these matters—and the potentially significant or indeterminate damages sought in some cases—an unfavorable outcome could affect our financial condition, results of operations, or cash flows in a particular reporting period.

The process of estimating and assessing potential outcomes associated with litigation, arbitration, governmental or self-regulatory examinations, investigations, or similar matters is inherently uncertain and requires significant judgment. This uncertainty is especially pronounced in the early stages of a legal matter, when legal issues and relevant facts have not yet been fully developed, analyzed, or tested through discovery, trial or hearing preparation, substantive mediation or settlement discussions, or other procedural milestones. It is also especially relevant for class actions or other multi-party claims; matters involving complex procedural or substantive issues or novel legal theories; and examinations, investigations, or other actions initiated by governmental and self-regulatory agencies, where traditional adjudicative processes may not apply.

As a result, we are often unable to determine whether the likelihood of a favorable or unfavorable outcome is remote, reasonably likely, or probable—or to estimate the amount or range of a probable or reasonably possible loss—until relatively late in the life cycle of a legal matter, and in some cases not until a several years have passed. Our assessments relating to these currently inestimable claims will evolve as developments occur, and actual outcomes may significantly differ from our estimates over time.

We have no related party transactions requiring disclosure under applicable accounting guidance. In the ordinary course of business, we extend credit to related parties, including executive officers, directors, principal shareholders, and their associates and related interests. These related party loans are made in compliance with applicable banking regulations.