Derivative financial instruments are recorded at fair value in Other assets and Other liabilities on the Condensed Consolidated Statements of Condition. The Company's policy is to present our derivative assets and derivative liabilities on the Condensed Consolidated Statements 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 Condensed 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 Accumulated other comprehensive loss on the Condensed Consolidated Statements of Condition and reclassified into interest expense in the same period in which the hedged transaction is recognized in earnings. At March 31, 2025, the Company had $40 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 $47 million (net-of-tax) of unrealized gains on derivatives previously classified as cash flow hedges recorded in Accumulated other comprehensive loss at December 31, 2024. There were no designated cash flow hedging relationships as of March 31, 2025.

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.

Interest rate swaps were previously used to hedge the changes in fair value of certain of our pools of prepayable fixed rate assets and beginning in the three months ended March 31, 2025, we began to use interest rate swaps to hedge the changes in fair value of certain debt securities available for sale.

For derivatives designated and that qualified as fair value hedges, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in interest income within loans and leases or securities and money market investments. The fair value basis adjustments remaining from discontinued hedges are recognized in interest income over the remaining life of the hedged items.

The fair value basis adjustment on our hedged real estate loans is included in Loans and leases held for investment on our Condensed Consolidated Statements of Condition. The following table sets forth information regarding the Company's carrying amounts on our hedged loans:


	March 31, 2025				December 31, 2024
	Carrying Amount of Hedged Items		Cumulative Amount of Fair Value Hedging Adjustments		Carrying Amount of Hedged Items		Cumulative Amount of Fair Value Hedging Adjustments

Debt securities available-for-sale(1)	$	993	$	7	$	—	$	—
Loans and leases held-for-investment(2)	4,245		(12)		5,861		(18)


	March 31, 2025
			Fair Value
	Notional Amount		Other Assets		Other Liabilities		Expiration Dates

Derivatives designated as hedging instruments:
Interest rate swaps	$	993	$	—	$	—	2028-2029
Derivatives not designated as hedging instruments:
Rate lock commitments(1)	$	547	$	4	$	3	2025
Mortgage-backed securities forwards(1)	281		—		3		2025
Interest rate swaps(2)	3,234		15		23		2025-2041


	December 31, 2024
			Fair Value
	Notional Amount		Other Assets		Other Liabilities		Expiration Date



Derivatives not designated as hedging instruments:
Rate lock commitments	$	563	$	3	$	3	2025
Mortgage-backed securities forwards	344		7		2		2025
Interest rate swaps	3,323		15		30		2024-2041


	March 31, 2025
	Gross Amounts Not Offset in the Statements of Condition		Cash Collateral Pledged (Received)
Derivatives not designated as hedging instruments:
Assets

Interest rate swaptions	$	15	$	—

Total derivative assets	$	15	$	—
Liabilities

Mortgage-backed securities forwards	$	3	$	30
Interest rate swaps (1)	23		4
Total derivative liabilities	$	26	$	34

(1)Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior day's fair value of open positions is considered settlement of the derivative position for accounting purposes.


	December 31, 2024
	Gross Amounts Not Offset in the Statements of Condition		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


	Three Months Ended March 31,
	2025		2024
Amount of gain (loss) recognized in accumulated other comprehensive loss	$	—	$	91
Amount reclassified from accumulated other comprehensive loss to interest expense	$	(9)	$	(23)

Amounts reported in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate borrowings. We will recognize $28 million of lower interest expense over the next rolling twelve month period related to the reclassification.


		Three Months Ended March 31,
		2025		2024
Derivatives not designated as hedging instruments	Income Statement Classification
Futures	Net return on mortgage servicing rights	$	—	$	2
Interest rate swaps and swaptions	Net return on mortgage servicing rights	—		(34)
Mortgage-backed securities forwards	Net return on mortgage servicing rights	—		(12)
Rate lock commitments, MBS forwards, and US Treasury Futures	Net gain on loan sales	(7)		22

Interest rate swaps (1)	Other non-interest income	—		(3)

Total derivative (loss) gain		$	(7)	$	(25)

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the Condensed Consolidated Statements of Condition that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows: