Derivative financial instruments are recorded at fair value in other assets and other liabilities on the Consolidated Statements of Condition. The Company's policy is to present our derivative assets and derivative liabilities on the Consolidated Statement of Condition on a gross basis, even when provisions allowing for set-off are in place. However, for derivative contracts cleared through certain central clearing parties, variation margin payments are recognized as settlements. We are exposed to non-performance risk by the counterparties to our various derivative financial instruments. A majority of our derivatives are centrally cleared through a Central Counterparty Clearing House or consist of residential mortgage interest rate lock commitments further limiting our exposure to non-performance risk. We believe that the non-performance risk inherent in our remaining derivative contracts is minimal based on credit standards and the collateral provisions of the derivative agreements.

Derivatives not designated as hedging instruments. The Company maintained a derivative portfolio of interest rate swaps, foreign currency swaps, futures, swaptions and forward commitments used to manage exposure to changes in interest rates and mortgage servicing right asset values and to meet the needs of customers. The Company also enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward sale commitments and U.S. Treasury futures. Changes in the fair value of derivatives not designated as hedging instruments are recognized on the Consolidated Statements of (Loss) Income.

Derivatives designated as hedging instruments. The Company has historically designated certain interest rate swaps as cash flow hedges on overnight Secured Overnight Financing Rates-based variable interest payments on federal home loan bank advances. Changes in the fair value of derivatives designated as cash flow hedges are recorded in other comprehensive income on the Consolidated Statements of Condition and reclassified into interest expense in the same period in which the hedged transaction is recognized in earnings. At December 31, 2024, the Company had $48 million (net-of-tax) of unrealized gains related to terminated derivatives that had been in cash flow hedge relationships of forecasted interest payments classified as cash flow hedges recorded in accumulated other comprehensive loss. The Company had $10 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss at December 31, 2023. There were no designated hedging relationships as of December 31, 2024.

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in interest rates. The Company previously used interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involved the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed rate assets. For derivatives previously designated and that qualified as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk were recognized in interest income. The fair value basis adjustments remaining from discontinued hedges are recognized in interest income over the remaining life of the hedged items. As of December 31, 2024, we have no derivatives designated in a fair value hedging relationship.

For the year ended December 31, 2024, interest income from loans and leases in the accompanying Consolidated Statements of (Loss) Income was increased $30 million due to the floating rate payments received on the swaps being greater than the fixed rate payments, as well as the accretion of the fair value basis adjustment subsequent to discontinuance of the hedges. As of December 31, 2023, interest income from loans and leases in the accompanying Consolidated Statements of (Loss) Income increased $24 million.

The fair value basis adjustment on our hedged real estate loans is included in loans and leases held for investment on our Consolidated Statements of Condition. The carrying amount of our hedged loans was $5.9 billion at December 31, 2024, of which unrealized gains of $18 million were due to the fair value hedge relationship. For December 31, 2023, the carrying amount of our hedged loans was $6.1 billion.


	December 31, 2024
			Fair Value
(in millions)	Notional Amount		Other Assets		Other Liabilities		Expiration Dates




Derivatives not designated as hedging instruments:
Assets

Mortgage-backed securities forwards	$	186	$	7	$	—	2025
Rate lock commitments	476		3		—		2025
Interest rate swaps and swaptions	1,541		15		—		2024-2041

Liabilities
Mortgage-backed securities forwards	$	158	$	—	$	2	2025
Rate lock commitments	87		—		3		2025
Interest rate swaps and swaptions	1,782		—		30		2024-2041


	December 31, 2023
			Fair Value
(in millions)	Notional Amount		Other Assets		Other Liabilities		Expiration Date
Derivatives designated as cash flow hedging instruments:
Interest rate swaps on FHLB advances	$	5,500	$	—	$	2	2025-2028
Derivatives designated as fair value hedging instruments:
Interest rate swaps on multi-family loans held for investment	$	2,000	$	—	$	1	2025-2027
Derivatives not designated as hedging instruments:
Assets

Mortgage-backed securities forwards	$	1,012	$	11	$	—	2024
Rate lock commitments	1,490		12		—		2024
Interest rate swaps and swaptions	5,431		115		—		2024-2041
Liabilities
Futures	$	2,235	$	—	$	1	2024
Mortgage-backed securities forwards	1,048		—		32		2024
Rate lock commitments	77		—		3		2024
Interest rate swaps and swaptions	2,720		—		59		2024-2054


	December 31, 2024
		Gross Amounts Not Offset in the Statements of Condition
(in millions)		Financial Instruments		Cash Collateral Pledged (Received)



Derivatives not designated as hedging instruments:
Assets
Mortgage-backed securities forwards		$	7	$	(2)
Interest rate swaptions		15		(3)

Total derivative assets		$	22	$	(5)
Liabilities

Mortgage-backed securities forwards		$	2	$	10
Interest rate swaps (1)		30		47
Total derivative liabilities		$	32	$	57


	December 31, 2023
		Gross Amounts Not Offset in the Statements of Condition
(in millions)		Financial Instruments		Cash Collateral Pledged (Received)
Derivatives designated hedging instruments:
Interest rate swaps on FHLB advances		$	2	$	75
Interest rate swaps on multi-family loans held for investment (1)		1		27
Derivatives not designated as hedging instruments:
Assets
Mortgage-backed securities forwards		$	11	$	(1)
Interest rate swaptions		115		(34)

Total derivative assets		$	126	$	(35)
Liabilities
Futures		$	1	$	3
Mortgage-backed securities forwards		32		57
Interest rate swaps (1)		59		42
Total derivative liabilities		$	92	$	102


	Year Ended December 31,
(in millions)	2024		2023		2022
Amount of gain (loss) recognized in accumulated other comprehensive loss	$	143	$	9	$	88
Amount of reclassified from accumulated other comprehensive loss to interest expense	$	(93)	$	(65)	$	(4)

In 2024, the Company repaid $2.8 billion of FHLB advances that were associated with previously de-designated cash flow hedging relationships. As no future cash flows will occur as a result of the repayments, the Company reclassified the gain of approximately $28.2 million out of accumulated other comprehensive loss into interest expense during the year.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrowings. We will recognize $30 million of lower interest expense over the next rolling twelve-month period related to the reclassification.


		Year Ended December 31,
(dollars in millions)		2024		2023				2022
Derivatives not designated as hedging instruments	Location of Gain (Loss)
Futures	Net return on mortgage servicing rights	$	2	$	1			$	(1)
Interest rate swaps and swaptions	Net return on mortgage servicing rights	(38)		(34)				(11)
Mortgage-backed securities forwards	Net return on mortgage servicing rights	(18)		(15)				(4)
Rate lock commitments and US Treasury futures	Net gain on loan sales	23		2				28
Forward commitments	Other noninterest income	—		—				(1)
Interest rate swaps (1)	Other non-interest income	—		(1)				—

Total derivative (loss) gain		$	(31)	$	(47)	$	(47)	$	11