Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table displays our assets and liabilities measured on our consolidated balance sheets at fair value on a recurring basis as of December 31, 2015 and 2014:

Table 19.1: Assets and Liabilities Measured at Fair Value on a Recurring Basis



	December 31, 2015
	Fair Value Measurements Using
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
U.S. Treasury securities	$	4,660	$	0	$	0	$	4,660
RMBS	0		26,807		504		27,311
CMBS	0		5,282		97		5,379
Other ABS	0		1,340		0		1,340
Other securities	355		2		14		371
Total securities available for sale	5,015		33,431		615		39,061
Other assets:
Consumer MSRs	0		0		68		68
Derivative assets⁽¹⁾⁽²⁾	2		1,459		57		1,518
Retained interests in securitizations	0		0		211		211
Total assets	$	5,017	$	34,890	$	951	$	40,858
Liabilities:
Other liabilities:
Derivative liabilities⁽¹⁾⁽²⁾	$	2	$	491	$	27	$	520
Total liabilities	$	2	$	491	$	27	$	520



	December 31, 2014
	Fair Value Measurements Using
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
U.S. Treasury securities	$	4,117	$	1	$	0	$	4,118
Corporate debt securities guaranteed by U.S. government agencies	0		467		333		800
RMBS	0		24,820		561		25,381
CMBS	0		5,291		228		5,519
Other ABS	0		2,597		65		2,662
Other securities	111		899		18		1,028
Total securities available for sale	4,228		34,075		1,205		39,508
Other assets:
Consumer MSRs	0		0		53		53
Derivative assets⁽¹⁾⁽²⁾	4		1,382		66		1,452
Retained interests in securitizations	0		0		221		221
Total assets	$	4,232	$	35,457	$	1,545	$	41,234
Liabilities:
Other liabilities:
Derivative liabilities⁽¹⁾⁽²⁾	$	3	$	293	$	43	$	339
Total liabilities	$	3	$	293	$	43	$	339

__________

⁽¹⁾

As of January 1, 2015, we changed our accounting principle to move from a gross basis of presentation to a net basis, for presenting qualifying derivative assets and liabilities, as well as the related right to reclaim cash collateral or obligation to return cash collateral. See “Note 1—Summary of Significant Accounting Policies” for additional information. Prior period results have been recast to conform to this presentation.

The balances represent gross derivative amounts and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive and negative positions and the related payables and receivables for cash collateral held or placed with the same counterparty. The net derivative assets were $986 million and $828 million, and the net derivative liabilities were $377 million and $175 million as of December 31, 2015 and December 31, 2014, respectively. See “Note 11—Derivative Instruments and Hedging Activities” for further information.


⁽²⁾	Does not reflect $4 million recognized as a net valuation allowance on derivative assets and liabilities for non-performance risk as of both December 31, 2015 and 2014. Non-performance risk is reflected in other assets and liabilities on the consolidated balance sheets and offset through non-interest income in the consolidated statements of income.

Schedule of Level 3 Inputs Reconciliation for Assets

The table below presents a reconciliation for all assets and liabilities measured and recognized at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2015 and 2014. When assets and liabilities are transferred between levels, we recognize the transfer as of the end of the period.

Table 19.2: Level 3 Recurring Fair Value Rollforward



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Year Ended December 31, 2015
				Total Gains (Losses) (Realized/Unrealized)																									Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of Dcember 31, 2015⁽³⁾
				Total Gains (Losses) (Realized/Unrealized)
(Dollars in millions)	Balance, January 1, 2015			Included in Net Income⁽¹⁾			Included in OCI			Purchases		Sales			Issuances			Settlements			Transfers Into Level 3⁽²⁾		Transfers Out of Level 3⁽²⁾			Balance, December 31, 2015
Assets:
Securities available for sale:
Corporate debt securities guaranteed by U.S. government agencies	$	333		$	(1	)	$	6		$	0	$	(226	)	$	0		$	(12	)	$	0	$	(100	)	$	0		$	0
RMBS	561			35			(3		)	0		0			0			(63		)	343		(369		)	504			36
CMBS	228			0			(1		)	138		0			0			(52		)	0		(216		)	97			0
Other ABS	65			1			(2		)	0		(20		)	0			0			0		(44		)	0			0
Other securities	18			0			0			4		0			0			(8		)	0		0			14			0
Total securities available for sale	1,205			35			0			142		(246		)	0			(135		)	343		(729		)	615			36
Other assets:
Consumer MSRs	53			(1		)	0			0		0			22			(6		)	0		0			68			(1		)
Derivative assets⁽⁴⁾	66			14			0			0		0			49			(59		)	0		(13		)	57			14
Retained interest in securitizations	221			(10		)	0			0		0			0			0			0		0			211			(10		)
Liabilities:
Other liabilities:
Derivative liabilities⁽⁴⁾	$	(43	)	$	(9	)	$	0		$	0	$	0		$	(20	)	$	36		$	0	$	9		$	(27	)	$	(9	)



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Year Ended December 31, 2014
				Total Gains (Losses) (Realized/Unrealized)																								Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of December 31, 2014⁽³⁾
				Total Gains (Losses) (Realized/Unrealized)
(Dollars in millions)	Balance, January 1, 2014			Included in Net Income⁽¹⁾			Included in OCI		Purchases		Sales			Issuances			Settlements			Transfers Into Level 3⁽²⁾		Transfers Out of Level 3⁽²⁾			Balance, December 31, 2014
Assets:
Securities available for sale:
Corporate debt securities guaranteed by U.S. government agencies	$	927		$	(5	)	$	20	$	0	$	(248	)	$	0		$	(63	)	$	64	$	(362	)	$	333		$	0
RMBS	1,304			65			39		1,022		0			0			(171		)	259		(1,957		)	561			64
CMBS	739			0			3		192		0			0			(75		)	66		(697		)	228			0
Other ABS	343			5			12		0		0			0			(3		)	75		(367		)	65			5
Other securities	17			(1		)	0		0		0			0			(8		)	10		0			18			0
Total securities available for sale	3,330			64			74		1,214		(248		)	0			(320		)	474		(3,383		)	1,205			69
Other assets:
Consumer MSRs	69			(27		)	0		0		0			15			(4		)	0		0			53			(27		)
Derivative assets⁽⁴⁾	50			20			0		0		0			20			(21		)	0		(3		)	66			19
Retained interest in securitization	199			22			0		0		0			0			0			0		0			221			22
Liabilities:
Other liabilities:
Derivative liabilities⁽⁴⁾	$	(38	)	$	(20	)	$	0	$	0	$	0		$	(15	)	$	29		$	0	$	1		$	(43	)	$	(20	)

__________


⁽¹⁾	Gains (losses) related to Level 3 Consumer MSRs, derivative assets and derivative liabilities, and retained interests in securitizations are reported in other non-interest income, which is a component of non-interest income, in our consolidated statements of income.


⁽²⁾	During the years ended December 31, 2015 and 2014, the transfers into Level 3 were primarily driven by less consistency among vendor pricing on individual securities, while the transfers out of Level 3 for 2015 and 2014 were primarily driven by greater consistency among multiple pricing sources.

⁽³⁾

The amount presented for unrealized gains (losses) for assets still held as of the reporting date primarily represents impairments of securities available for sale, accretion on certain fixed maturity securities, changes in fair value of derivative instruments and mortgage servicing rights transactions. Impairment is reported in total OTTI, which is a component of non-interest income, in our consolidated statements of income.


⁽⁴⁾	All Level 3 derivative assets and liabilities are presented on a gross basis and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive and negative positions and the related payables and receivables for cash collateral held or placed with the same counterparty.

Schedule of Level 3 Inputs Reconciliation for Liabilities

Table 19.2: Level 3 Recurring Fair Value Rollforward



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Year Ended December 31, 2015
				Total Gains (Losses) (Realized/Unrealized)																									Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of Dcember 31, 2015⁽³⁾
				Total Gains (Losses) (Realized/Unrealized)
(Dollars in millions)	Balance, January 1, 2015			Included in Net Income⁽¹⁾			Included in OCI			Purchases		Sales			Issuances			Settlements			Transfers Into Level 3⁽²⁾		Transfers Out of Level 3⁽²⁾			Balance, December 31, 2015
Assets:
Securities available for sale:
Corporate debt securities guaranteed by U.S. government agencies	$	333		$	(1	)	$	6		$	0	$	(226	)	$	0		$	(12	)	$	0	$	(100	)	$	0		$	0
RMBS	561			35			(3		)	0		0			0			(63		)	343		(369		)	504			36
CMBS	228			0			(1		)	138		0			0			(52		)	0		(216		)	97			0
Other ABS	65			1			(2		)	0		(20		)	0			0			0		(44		)	0			0
Other securities	18			0			0			4		0			0			(8		)	0		0			14			0
Total securities available for sale	1,205			35			0			142		(246		)	0			(135		)	343		(729		)	615			36
Other assets:
Consumer MSRs	53			(1		)	0			0		0			22			(6		)	0		0			68			(1		)
Derivative assets⁽⁴⁾	66			14			0			0		0			49			(59		)	0		(13		)	57			14
Retained interest in securitizations	221			(10		)	0			0		0			0			0			0		0			211			(10		)
Liabilities:
Other liabilities:
Derivative liabilities⁽⁴⁾	$	(43	)	$	(9	)	$	0		$	0	$	0		$	(20	)	$	36		$	0	$	9		$	(27	)	$	(9	)



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Year Ended December 31, 2014
				Total Gains (Losses) (Realized/Unrealized)																								Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of December 31, 2014⁽³⁾
				Total Gains (Losses) (Realized/Unrealized)
(Dollars in millions)	Balance, January 1, 2014			Included in Net Income⁽¹⁾			Included in OCI		Purchases		Sales			Issuances			Settlements			Transfers Into Level 3⁽²⁾		Transfers Out of Level 3⁽²⁾			Balance, December 31, 2014
Assets:
Securities available for sale:
Corporate debt securities guaranteed by U.S. government agencies	$	927		$	(5	)	$	20	$	0	$	(248	)	$	0		$	(63	)	$	64	$	(362	)	$	333		$	0
RMBS	1,304			65			39		1,022		0			0			(171		)	259		(1,957		)	561			64
CMBS	739			0			3		192		0			0			(75		)	66		(697		)	228			0
Other ABS	343			5			12		0		0			0			(3		)	75		(367		)	65			5
Other securities	17			(1		)	0		0		0			0			(8		)	10		0			18			0
Total securities available for sale	3,330			64			74		1,214		(248		)	0			(320		)	474		(3,383		)	1,205			69
Other assets:
Consumer MSRs	69			(27		)	0		0		0			15			(4		)	0		0			53			(27		)
Derivative assets⁽⁴⁾	50			20			0		0		0			20			(21		)	0		(3		)	66			19
Retained interest in securitization	199			22			0		0		0			0			0			0		0			221			22
Liabilities:
Other liabilities:
Derivative liabilities⁽⁴⁾	$	(38	)	$	(20	)	$	0	$	0	$	0		$	(15	)	$	29		$	0	$	1		$	(43	)	$	(20	)

__________


⁽¹⁾	Gains (losses) related to Level 3 Consumer MSRs, derivative assets and derivative liabilities, and retained interests in securitizations are reported in other non-interest income, which is a component of non-interest income, in our consolidated statements of income.


⁽²⁾	During the years ended December 31, 2015 and 2014, the transfers into Level 3 were primarily driven by less consistency among vendor pricing on individual securities, while the transfers out of Level 3 for 2015 and 2014 were primarily driven by greater consistency among multiple pricing sources.

⁽³⁾


⁽⁴⁾	All Level 3 derivative assets and liabilities are presented on a gross basis and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive and negative positions and the related payables and receivables for cash collateral held or placed with the same counterparty.

Schedule of Assets Measured at Fair Value on Recurring Basis Quantitative Information

The following table presents the significant unobservable inputs relied upon to determine the fair values of our Level 3 financial instruments on a recurring basis. We utilize multiple third-party pricing services to obtain fair value measures for our securities. Several of our third-party pricing services are only able to provide unobservable input information for a limited number of securities due to software licensing restrictions. Other third-party pricing services are able to provide unobservable input information for all securities for which they provide a valuation. As a result, the unobservable input information for the securities available for sale presented below represents a composite summary of all information we are able to obtain for a majority of our securities. The unobservable input information for all other Level 3 financial instruments is based on the assumptions used in our internal valuation models.

Table 19.3: Quantitative Information about Level 3 Fair Value Measurements

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in millions)

Fair Value at December 31,
2015

Significant

Valuation

Techniques

Significant

Unobservable

Inputs

Range

Weighted

Average

Assets:

Securities available for sale:

RMBS

504

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate
Default rate
Loss severity

0-12%
0-28%
0-8%
16-85%

6%
4%
4%
55%

CMBS

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate

2-3%
0-15%

3%
9%

Other securities

Discounted cash flows

Yield

Other assets:

Consumer MSRs

Discounted cash flows

Total prepayment rate
Discount rate
Option-adjusted spread rate
Servicing cost ($ per loan)

11-18%
12%
435-1,500 bps
$93-$201

16%
12%
474 bps
$98

Derivative assets⁽¹⁾

Discounted cash flows

Swap rates

Retained interests in securitization⁽²⁾

211

Discounted cash flows

Life of receivables (months) Constant prepayment rate
Discount rate
Default rate
Loss severity

16-75
1-13%
4-9%
2-6%
15-94%

N/A

Liabilities:

Derivative liabilities⁽¹⁾

Discounted cash flows

Swap rates

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in millions)

Fair Value at

December 31,

2014

Significant

Valuation

Techniques

Significant

Unobservable

Inputs

Range

Weighted

Average

Assets:

Securities available for sale:

RMBS

561

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate
Default rate
Loss severity

0-18%
0-23%
0-15%
0-85%

6%
4%
5%
55%

CMBS

228

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate

1-4%
0-100%

1%
5%

Other ABS

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate
Default rate
Loss severity

2-7%
0-3%
1-10%
30-88%

5%
2%
7%
71%

U.S. government guaranteed debt and other securities

351

Discounted cash flows (3rd party pricing)

Yield

1-4%

Other assets:

Consumer MSRs

Discounted cash flows

Total prepayment rate
Discount rate
Option-adjusted spread rate
Servicing cost ($ per loan)

12-27%
12%
435-1,500 bps
$93-$209

18%
12%
478 bps
$101

Derivative assets⁽¹⁾

Discounted cash flows

Swap rates

2-3%

Retained interests in securitization⁽²⁾

221

Discounted cash flows

Life of receivables (months) Constant prepayment rate
Discount rate
Default rate
Loss severity

25-72
2-13%
4-9%
2-8%
19-95%

N/A

Liabilities:

Derivative liabilities⁽¹⁾

Discounted cash flows

Swap rates

2-3%

__________


⁽¹⁾	All Level 3 derivative assets and liabilities are presented on a gross basis and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive and negative positions and the related payables and receivables for cash collateral held or placed with the same counterparty.


⁽²⁾	Due to the nature of the various mortgage securitization structures in which we have retained interests, it is not meaningful to present a consolidated weighted average for the significant unobservable inputs.

Schedule of Liabilities Measured at Fair Value on Recurring Basis Quantitative Information

Table 19.3: Quantitative Information about Level 3 Fair Value Measurements

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in millions)

Fair Value at December 31,
2015

Significant

Valuation

Techniques

Significant

Unobservable

Inputs

Range

Weighted

Average

Assets:

Securities available for sale:

RMBS

504

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate
Default rate
Loss severity

0-12%
0-28%
0-8%
16-85%

6%
4%
4%
55%

CMBS

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate

2-3%
0-15%

3%
9%

Other securities

Discounted cash flows

Yield

Other assets:

Consumer MSRs

Discounted cash flows

Total prepayment rate
Discount rate
Option-adjusted spread rate
Servicing cost ($ per loan)

11-18%
12%
435-1,500 bps
$93-$201

16%
12%
474 bps
$98

Derivative assets⁽¹⁾

Discounted cash flows

Swap rates

Retained interests in securitization⁽²⁾

211

Discounted cash flows

Life of receivables (months) Constant prepayment rate
Discount rate
Default rate
Loss severity

16-75
1-13%
4-9%
2-6%
15-94%

N/A

Liabilities:

Derivative liabilities⁽¹⁾

Discounted cash flows

Swap rates

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in millions)

Fair Value at

December 31,

2014

Significant

Valuation

Techniques

Significant

Unobservable

Inputs

Range

Weighted

Average

Assets:

Securities available for sale:

RMBS

561

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate
Default rate
Loss severity

0-18%
0-23%
0-15%
0-85%

6%
4%
5%
55%

CMBS

228

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate

1-4%
0-100%

1%
5%

Other ABS

Discounted cash flows (3rd party pricing)

Yield
Constant prepayment rate
Default rate
Loss severity

2-7%
0-3%
1-10%
30-88%

5%
2%
7%
71%

U.S. government guaranteed debt and other securities

351

Discounted cash flows (3rd party pricing)

Yield

1-4%

Other assets:

Consumer MSRs

Discounted cash flows

Total prepayment rate
Discount rate
Option-adjusted spread rate
Servicing cost ($ per loan)

12-27%
12%
435-1,500 bps
$93-$209

18%
12%
478 bps
$101

Derivative assets⁽¹⁾

Discounted cash flows

Swap rates

2-3%

Retained interests in securitization⁽²⁾

221

Discounted cash flows

Life of receivables (months) Constant prepayment rate
Discount rate
Default rate
Loss severity

25-72
2-13%
4-9%
2-8%
19-95%

N/A

Liabilities:

Derivative liabilities⁽¹⁾

Discounted cash flows

Swap rates

2-3%

__________


⁽¹⁾	All Level 3 derivative assets and liabilities are presented on a gross basis and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive and negative positions and the related payables and receivables for cash collateral held or placed with the same counterparty.


⁽²⁾	Due to the nature of the various mortgage securitization structures in which we have retained interests, it is not meaningful to present a consolidated weighted average for the significant unobservable inputs.

Schedule of Assets Measured at Fair Value on Nonrecurring Basis

The following table presents the carrying amount of the assets measured at fair value on a nonrecurring basis and still held as of December 31, 2015 and 2014, and for which a nonrecurring fair value measurement was recorded during the years then ended:

Table 19.4: Nonrecurring Fair Value Measurements Related to Assets Still Held at Period End



	December 31, 2015
	Estimated Fair Value Hierarchy						Total
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Loans held for investment	$	0	$	0	$	362	$	362
Loans held for sale	0		149		0		149
Other assets⁽¹⁾	0		0		92		92
Total	$	0	$	149	$	454	$	603



	December 31, 2014
	Estimated Fair Value Hierarchy						Total
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Loans held for investment	$	0	$	0	$	121	$	121
Loans held for sale	0		34		0		34
Other assets⁽¹⁾	0		0		65		65
Total	$	0	$	34	$	186	$	220

__________


⁽¹⁾	Includes foreclosed property and repossessed assets of $54 million and long-lived assets held for sale of $38 million as of December 31, 2015, compared to foreclosed property and repossessed assets of $60 million and long-lived assets held for sale of $5 million as of December 31, 2014.

Schedule of Earnings Related to Assets Measured at Fair Value on Nonrecurring Basis

The following table presents total nonrecurring fair value measurements for the period, included in earnings, attributable to the change in fair value relating to assets that are still held at December 31, 2015 and 2014:

Table 19.5: Nonrecurring Fair Value Measurements Included in Earnings Related to Assets Still Held at Period End



	Total Losses
	Year Ended December 31,
(Dollars in millions)	2015			2014
Loans held for investment	$	(80	)	$	(24	)
Loans held for sale	(1		)	0
Other assets⁽¹⁾	(45		)	(12		)
Total	$	(126	)	$	(36	)

__________


⁽¹⁾	Includes losses related to foreclosed property, repossessed assets and long-lived assets.

Schedule of Fair Value of Financial Instruments

Table 19.6: Fair Value of Financial Instruments



	December 31, 2015
	Carrying Amount		Estimated Fair Value		Estimated Fair Value Hierarchy
(Dollars in millions)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	8,023	$	8,023	$	8,023	$	0	$	0
Restricted cash for securitization investors	1,017		1,017		1,017		0		0
Securities held to maturity	24,619		25,317		198		25,068		51
Net loans held for investment	224,721		222,007		0		0		222,007
Loans held for sale	904		933		0		860		73
Interest receivable⁽¹⁾	1,189		1,189		0		1,189		0
Financial liabilities:
Non-interest bearing deposits	$	25,847	$	25,847	$	25,847	$	0	$	0
Interest-bearing deposits	191,874		185,075		0		15,848		169,227
Securitized debt obligations	16,166		16,225		0		16,225		0
Senior and subordinated notes	21,837		22,062		0		22,062		0
Federal funds purchased and securities loaned or sold under agreements to repurchase	981		981		981		0		0
Other borrowings	20,131		20,134		0		20,134		0
Interest payable⁽¹⁾	299		299		0		299		0



	December 31, 2014
	Carrying Amount		Estimated Fair Value		Estimated Fair Value Hierarchy
(Dollars in millions)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	7,242	$	7,242	$	7,242	$	0	$	0
Restricted cash for securitization investors	234		234		234		0		0
Securities held to maturity	22,500		23,634		0		23,503		131
Net loans held for investment	203,933		207,104		0		0		207,104
Loans held for sale	626		650		0		650		0
Interest receivable⁽¹⁾	1,079		1,079		0		1,079		0
Financial liabilities:
Non-interest bearing deposits	$	25,081	$	25,081	$	25,081	$	0	$	0
Interest-bearing deposits	180,467		174,074		0		11,668		162,406
Securitized debt obligations	11,624		11,745		0		11,745		0
Senior and subordinated notes	18,684		19,083		0		19,083		0
Federal funds purchased and securities loaned or sold under agreements to repurchase	880		880		880		0		0
Other borrowings	17,269		17,275		0		17,275		0
Interest payable⁽¹⁾	254		254		0		254		0

__________

⁽¹⁾

As of January 1, 2015, we changed our accounting principle to move from a gross basis of presentation to a net basis, for presenting qualifying derivative assets and liabilities, as well as the related right to reclaim cash collateral or obligation to return cash collateral. Prior period results have been recast to conform to this presentation. See additional information in “Note 1—Summary of Significant Accounting Policies.”