Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Bancorp measures certain financial assets and liabilities at fair value in accordance with U.S. GAAP, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. For more information regarding the fair value hierarchy, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2024.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of:

	Fair Value Measurements Using
March 31, 2025 ($ in millions)	Level 1		Level 2	Level 3	Total Fair Value
Assets:
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities	$	4,361	—	—	4,361
Mortgage-backed securities:
Agency residential mortgage-backed securities	—		6,601	—	6,601
Agency commercial mortgage-backed securities	—		21,056	—	21,056
Non-agency commercial mortgage-backed securities	—		3,706	—	3,706
Asset-backed securities and other debt securities	—		3,199	—	3,199
Available-for-sale debt and other securities(a)	4,361		34,562	—	38,923
Trading debt securities:
U.S. Treasury and federal agencies securities	675		20	—	695
Obligations of states and political subdivisions securities	—		70	—	70
Agency residential mortgage-backed securities	—		26	—	26
Asset-backed securities and other debt securities	—		368	—	368
Trading debt securities	675		484	—	1,159
Equity securities	465		29	—	494
Residential mortgage loans held for sale	—		445	—	445
Residential mortgage loans(b)	—		—	109	109
Servicing rights	—		—	1,663	1,663
Derivative assets:
Interest rate contracts	1		580	5	586
Foreign exchange contracts	—		798	—	798
Commodity contracts	72		734	—	806
Derivative assets(c)	73		2,112	5	2,190
Total assets	$	5,574	37,632	1,777	44,983
Liabilities:
Derivative liabilities:
Interest rate contracts	$	2	747	5	754
Foreign exchange contracts	—		758	—	758
Equity contracts	—		—	173	173
Commodity contracts	165		635	—	800
Derivative liabilities(d)	167		2,140	178	2,485
Short positions:
U.S. Treasury and federal agencies securities	76		—	—	76
Asset-backed securities and other debt securities	—		125	—	125
Equity securities	42		—	—	42
Short positions(d)	118		125	—	243
Total liabilities	$	285	2,265	178	2,728

(a)Excludes FHLB, FRB and DTCC restricted stock holdings totaling $321, $501 and $2, respectively, at March 31, 2025.

(b)Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.

(c)Included in other assets in the Condensed Consolidated Balance Sheets.

(d)Included in other liabilities in the Condensed Consolidated Balance Sheets.

	Fair Value Measurements Using
December 31, 2024 ($ in millions)	Level 1		Level 2	Level 3	Total Fair Value
Assets:
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities	$	4,360	—	—	4,360
Mortgage-backed securities:
Agency residential mortgage-backed securities	—		5,681	—	5,681
Agency commercial mortgage-backed securities	—		20,832	—	20,832
Non-agency commercial mortgage-backed securities	—		4,167	—	4,167
Asset-backed securities and other debt securities	—		3,729	—	3,729
Available-for-sale debt and other securities(a)	4,360		34,409	—	38,769
Trading debt securities:
U.S. Treasury and federal agencies securities	591		35	—	626
Obligations of states and political subdivisions securities	—		120	—	120
Agency residential mortgage-backed securities	—		10	—	10
Asset-backed securities and other debt securities	—		429	—	429
Trading debt securities	591		594	—	1,185
Equity securities	307		34	—	341
Residential mortgage loans held for sale	—		574	—	574
Residential mortgage loans(b)	—		—	108	108
Servicing rights	—		—	1,704	1,704
Derivative assets:
Interest rate contracts	7		721	2	730
Foreign exchange contracts	—		1,167	—	1,167
Commodity contracts	75		500	—	575
Derivative assets(c)	82		2,388	2	2,472
Total assets	$	5,340	37,999	1,814	45,153
Liabilities:
Derivative liabilities:
Interest rate contracts	$	—	939	5	944
Foreign exchange contracts	—		1,120	—	1,120
Equity contracts	—		—	170	170
Commodity contracts	57		507	—	564
Derivative liabilities(d)	57		2,566	175	2,798
Short positions:
U.S. Treasury and federal agencies securities	139		—	—	139
Asset-backed securities and other debt securities	—		156	—	156
Equity securities	21		—	—	21
Short positions(d)	160		156	—	316
Total liabilities	$	217	2,722	175	3,114

(a)Excludes FHLB, FRB and DTCC restricted stock holdings totaling $276, $500 and $2, respectively, at December 31, 2024.

(b)Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.

(c)Included in other assets in the Condensed Consolidated Balance Sheets.

(d)Included in other liabilities in the Condensed Consolidated Balance Sheets.

For further information on the valuation methodologies used for significant instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, refer to Note 28 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2024.

The following tables are a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the three months ended March 31, 2025 ($ in millions)	Residential Mortgage Loans		Servicing Rights	Interest Rate Derivatives, Net(a)	Equity Derivatives	Total Fair Value
Balance, beginning of period	$	108	1,704	(3)	(170)	1,639
Total (losses) gains (realized/unrealized):(b)
Included in earnings	2		(50)	15	(18)	(51)
Purchases/originations	—		9	(1)	—	8
Settlements	(3)		—	(11)	15	1
Transfers into Level 3(c)	2		—	—	—	2
Balance, end of period	$	109	1,663	—	(173)	1,599
The amount of total (losses) gains for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at March 31, 2025	$	2	(35)	6	(18)	(45)

(a)Net interest rate derivatives include $5 for both derivative assets and liabilities as of March 31, 2025.

(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at March 31, 2025.

(c)Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the three months ended March 31, 2024 ($ in millions)	Residential Mortgage Loans		Servicing Rights	Interest Rate Derivatives, Net(a)	Equity Derivatives	Total Fair Value
Balance, beginning of period	$	116	1,737	—	(168)	1,685
Total (losses) gains (realized/unrealized):(b)
Included in earnings	(2)		8	9	(17)	(2)
Purchases/originations	—		11	—	—	11
Settlements	(3)		—	(9)	23	11
Transfers into Level 3(c)	2		—	—	—	2
Balance, end of period	$	113	1,756	—	(162)	1,707
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at March 31, 2024	$	(2)	25	5	(17)	11

(a)Net interest rate derivatives include $6 for both derivative assets and liabilities as of March 31, 2024.

(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at March 31, 2024.

(c)Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.

The total losses and gains included in earnings for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were recorded in the Condensed Consolidated Statements of Income as follows:

	For the three months ended March 31,
($ in millions)	2025		2024
Mortgage banking net revenue	$	(34)	14
Capital markets fees	1		1
Other noninterest income	(18)		(17)
Total losses	$	(51)	(2)

The total losses and gains included in earnings attributable to changes in unrealized gains and losses related to Level 3 assets and liabilities still held at March 31, 2025 and 2024 were recorded in the Condensed Consolidated Statements of Income as follows:

	For the three months ended March 31,
($ in millions)	2025		2024
Mortgage banking net revenue	$	(28)	27
Capital markets fees	1		1
Other noninterest income	(18)		(17)
Total (losses) gains	$	(45)	11

The following tables present information as of March 31, 2025 and 2024 about significant unobservable inputs related to the Bancorp’s material categories of Level 3 financial assets and liabilities measured at fair value on a recurring basis:

As of March 31, 2025 ($ in millions)
Financial Instrument	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range of Inputs			Weighted-Average
Residential mortgage loans	$	109	Loss rate model	Interest rate risk factor	(51.9)	-	5.7%		(11.5)	%	(a)
				Credit risk factor	—	-	0.7%		0.1	%	(a)
Servicing rights	1,663		DCF	Prepayment speed	—	-	100.0%	(Fixed)	6.3	%	(b)
								(Adjustable)	16.0	%	(b)
				OAS (bps)	335	-	1,821	(Fixed)	418		(b)
								(Adjustable)	725		(b)
IRLCs, net	5		DCF	Loan closing rates	20.5	-	96.0%		79.7	%	(c)
Swap associated with the sale of Visa, Inc. Class B Shares	(173)		DCF	Timing of the resolution    of the Covered Litigation	Q2 2027	-	Q1 2028	Q4 2027			(d)

(a)Unobservable inputs were weighted by the relative carrying value of the instruments.

(b)Unobservable inputs were weighted by the relative unpaid principal balance of the instruments.

(c)Unobservable inputs were weighted by the relative notional amount of the instruments.

(d)Unobservable inputs were weighted by the probability of the final funding date of the instruments.

As of March 31, 2024 ($ in millions)
Financial Instrument	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range of Inputs			Weighted-Average
Residential mortgage loans	$	113	Loss rate model	Interest rate risk factor	(25.2)	-	3.7 %		(13.4)	%	(a)
				Credit risk factor	—	-	0.6 %		0.1	%	(a)
Servicing rights	1,756		DCF	Prepayment speed	—	-	100.0 %	(Fixed)	5.8	%	(b)
								(Adjustable)	22.9	%	(b)
				OAS (bps)	448	-	1,833	(Fixed)	460		(b)
								(Adjustable)	702		(b)
IRLCs, net	5		DCF	Loan closing rates	20.0	-	96.0 %		79.4	%	(c)
Swap associated with the sale of Visa, Inc. Class B Shares	(162)		DCF	Timing of the resolution    of the Covered Litigation	Q2 2026	-	Q1 2028	Q4 2026			(d)

(a)Unobservable inputs were weighted by the relative carrying value of the instruments.

(b)Unobservable inputs were weighted by the relative unpaid principal balance of the instruments.

(c)Unobservable inputs were weighted by the relative notional amount of the instruments.

(d)Unobservable inputs were weighted by the probability of the final funding date of the instruments.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The following tables provide the fair value hierarchy and carrying amount of all assets that were held as of March 31, 2025 and 2024, and for which a nonrecurring fair value adjustment was recorded during the three months ended March 31, 2025 and 2024, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.

	Fair Value Measurements Using					Total (Losses) Gains
As of March 31, 2025 ($ in millions)	Level 1		Level 2	Level 3	Total	For the three months ended March 31, 2025
Commercial loans and leases	$	—	—	261	261	(126)
Consumer and residential mortgage loans	—		—	145	145	(4)
OREO	—		—	4	4	1
Private equity investments	—		13	—	13	4
Total	$	—	13	410	423	(125)

	Fair Value Measurements Using					Total (Losses) Gains
As of March 31, 2024 ($ in millions)	Level 1		Level 2	Level 3	Total	For the three months ended  March 31, 2024
Commercial loans held for sale	$	—	—	25	25	—
Commercial loans and leases	—		—	130	130	(60)
Consumer and residential mortgage loans	—		—	197	197	(3)
OREO	—		—	1	1	—
Bank premises and equipment	—		—	1	1	—
Private equity investments	—		—	—	—	9
Total	$	—	—	354	354	(54)

The following tables present information as of March 31, 2025 and 2024 about significant unobservable inputs related to the Bancorp’s material categories of Level 3 financial assets and liabilities measured on a nonrecurring basis:

As of March 31, 2025 ($ in millions)
Financial Instrument	Fair Value		Valuation Technique	Significant Unobservable Inputs	Ranges of Inputs	Weighted-Average
Commercial loans and leases	$	261	Appraised value	Collateral value	NM	NM
Consumer and residential mortgage loans	145		Appraised value	Collateral value	NM	NM
OREO	4		Appraised value	Appraised value	NM	NM

As of March 31, 2024 ($ in millions)
Financial Instrument	Fair Value		Valuation Technique	Significant Unobservable Inputs	Ranges of Inputs	Weighted-Average
Commercial loans held for sale	$	25	Comparable company analysis	Market comparable transactions	NM	NM
Commercial loans and leases	130		Appraised value	Collateral value	NM	NM
Consumer and residential mortgage loans	197		Appraised value	Collateral value	NM	NM
OREO	1		Appraised value	Appraised value	NM	NM
Bank premises and equipment	1		Appraised value	Appraised value	NM	NM
Private equity investments	—		Comparable company analysis	Market comparable transactions	NM	NM

Commercial loans held for sale

The Bancorp estimated the fair value of certain commercial loans held for sale during the three months ended March 31, 2024. These valuations were based on appraisals of the underlying collateral or by applying unobservable inputs such as an estimated market discount to the unpaid principal balance of the loans or the appraised value of the assets (Level 3 of the valuation hierarchy).

Portfolio loans and leases

During the three months ended March 31, 2025 and 2024, the Bancorp recorded nonrecurring adjustments to certain collateral-dependent portfolio loans and leases. When a loan is collateral-dependent, the fair value of the loan is generally based on the fair value less cost to sell of the underlying collateral supporting the loan and therefore these loans were classified within Level 3 of the valuation hierarchy. In cases where the amortized cost basis of the loan or lease exceeds the estimated net realizable value of the collateral, then an ALLL is recognized, or a charge-off once the remaining amount is considered uncollectible.

OREO

During the three months ended March 31, 2025 and 2024, the Bancorp recorded nonrecurring adjustments to certain commercial and residential real estate properties and branch-related real estate no longer intended to be used for banking purposes classified as OREO and measured at the lower of carrying amount or fair value. These nonrecurring losses were primarily due to declines in real estate values of the

properties upon the transfer, or subsequent to the transfer, to OREO. The fair value amounts are generally based on appraisals of the property values, resulting in a classification within Level 3 of the valuation hierarchy. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Private equity investments

The Bancorp accounts for its private equity investments using the measurement alternative to fair value, except for those accounted for under the equity method of accounting. Under the measurement alternative, the Bancorp carries each investment at its cost basis minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Bancorp recognized gains of $4 million and $9 million during the three months ended March 31, 2025 and 2024, respectively, resulting from observable price changes. The carrying value of the Bancorp’s private equity investments still held as of March 31, 2025 includes a cumulative $23 million of positive adjustments as a result of observable price changes since January 1, 2018. Because these adjustments are based on observable transactions in inactive markets, they are classified in Level 2 of the fair value hierarchy.

For private equity investments which are accounted for using the measurement alternative to fair value, the Bancorp qualitatively evaluates each investment quarterly to determine if impairment may exist. If necessary, the Bancorp then measures impairment by estimating the value of its investment and comparing that to the investment’s carrying value, whether or not the Bancorp considers the impairment to be temporary. These valuations are typically developed using a DCF method, but other methods may be used if more appropriate for the circumstances. These valuations are based on unobservable inputs and therefore are classified in Level 3 of the fair value hierarchy. For both the three months ended March 31, 2025 and 2024, the Bancorp did not recognize impairment charges on its private equity investments. The carrying value of the Bancorp’s private equity investments still held as of March 31, 2025 includes a cumulative $15 million of impairment charges recognized since adoption of the measurement alternative to fair value on January 1, 2018.

Fair Value Option

The Bancorp elected to measure certain residential mortgage loans held for sale under the fair value option as allowed under U.S. GAAP. Electing to measure residential mortgage loans held for sale at fair value reduces certain timing differences and better matches changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. Management’s intent to sell residential mortgage loans classified as held for sale may change over time due to such factors as changes in the overall liquidity in markets or changes in characteristics specific to certain loans held for sale. Consequently, these loans may be reclassified to loans held for investment and maintained in the Bancorp’s loan portfolio. In such cases, the loans will continue to be measured at fair value.

Fair value changes recognized in earnings for residential mortgage loans held at March 31, 2025 and 2024 for which the fair value option was elected included losses of $2 million and $11 million, respectively. These losses are reported in mortgage banking net revenue in the Condensed Consolidated Statements of Income.

Valuation adjustments related to instrument-specific credit risk for residential mortgage loans measured at fair value negatively impacted the fair value of those loans by an immaterial amount at both March 31, 2025 and December 31, 2024. Interest on loans measured at fair value is accrued as it is earned using the effective interest method and is reported as interest income in the Condensed Consolidated Statements of Income.

The following table summarizes the difference between the fair value and the unpaid principal balance for residential mortgage loans measured at fair value as of:

March 31, 2025 ($ in millions)	Aggregate Fair Value		Aggregate Unpaid Principal Balance
Residential mortgage loans measured at fair value	$	554	556
Past due loans of 30-89 days	1		1
Nonaccrual loans	2		2
December 31, 2024
Residential mortgage loans measured at fair value	$	682	693
Past due loans of 30-89 days	1		1
Past due loans of 90 days or more	1		1
Nonaccrual loans	2		2

Fair Value of Certain Financial Instruments

The following tables summarize the carrying amounts and estimated fair values for certain financial instruments, excluding financial instruments measured at fair value on a recurring basis:

	Net Carrying Amount		Fair Value Measurements Using			Total Fair Value
As of March 31, 2025 ($ in millions)			Level 1	Level 2	Level 3
Financial assets:
Cash and due from banks	$	3,009	3,009	—	—	3,009
Other short-term investments	14,965		14,965	—	—	14,965
Other securities	824		—	824	—	824
Held-to-maturity securities	11,185		2,387	8,683	2	11,072
Loans and leases held for sale	28		—	—	28	28
Portfolio loans and leases:
Commercial loans and leases	73,896		—	—	74,303	74,303
Consumer and residential mortgage loans	45,802		—	—	43,288	43,288
Total portfolio loans and leases, net	$	119,698	—	—	117,590	117,590
Financial liabilities:
Deposits	$	165,505	—	165,617	—	165,617
Federal funds purchased	227		227	—	—	227
Other short-term borrowings	5,457		—	5,463	—	5,463
Long-term debt	14,574		8,667	6,161	—	14,828

	Net Carrying Amount		Fair Value Measurements Using			Total Fair Value
As of December 31, 2024 ($ in millions)			Level 1	Level 2	Level 3
Financial assets:
Cash and due from banks	$	3,014	3,014	—	—	3,014
Other short-term investments	17,120		17,120	—	—	17,120
Other securities	778		—	778	—	778
Held-to-maturity securities	11,278		2,344	8,619	2	10,965
Loans and leases held for sale	66		—	—	66	66
Portfolio loans and leases:
Commercial loans and leases	72,139		—	—	72,319	72,319
Consumer and residential mortgage loans	45,192		—	—	42,155	42,155
Total portfolio loans and leases, net	$	117,331	—	—	114,474	114,474
Financial liabilities:
Deposits	$	167,252	—	167,353	—	167,353
Federal funds purchased	204		204	—	—	204
Other short-term borrowings	4,450		—	4,459	—	4,459
Long-term debt	14,440		3,753	10,835	—	14,588