v3.25.4
Fair Value Measurements
 12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Note 14:  Fair Value Measurements
We use fair value measurements to recognize fair value adjustments to certain assets and liabilities and to fulfill fair value disclosure requirements. Assets and liabilities recognized at fair value on a recurring basis are presented in Table 14.1 in this Note. Additionally, from time to time, we recognize fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of an accounting method such as lower of cost or fair value (LOCOM) and the measurement alternative, or write-downs of individual assets. Assets recognized at fair value on a nonrecurring basis are presented in Table 14.4 in this Note. We provide in Table 14.9 estimates of fair value for financial instruments that are not recognized at fair value, such as loans and debt liabilities carried at amortized cost.

FAIR VALUE HIERARCHY. We classify our assets and liabilities recognized at fair value as either Level 1, 2, or 3 in the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on unadjusted quoted prices in active markets and the lowest priority (Level 3) is assigned to valuations that include one or more significant unobservable inputs. See Note 1 (Summary of Significant Accounting Policies) for a detailed description of the fair value hierarchy.

In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness of transactions, and our understanding of the valuation techniques and significant inputs used. This determination is ultimately based upon the specific facts and circumstances of each instrument or instrument category and judgments are made regarding the significance of the unobservable inputs to the instruments’ fair value measurement in its entirety. If one or more unobservable inputs is considered significant, the instrument is classified as Level 3.

We do not classify nonmarketable equity securities in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) as a practical expedient to measure fair value. Marketable equity securities with published NAVs are classified in the fair value hierarchy.

Assets
TRADING DEBT SECURITIES. Trading debt securities are recognized at fair value on a recurring basis. These securities are valued using internal trader prices that are subject to independent price verification procedures, which includes comparing internal trader prices against multiple independent pricing sources, such as prices obtained from third-party pricing services, observed trades, and other approved market data. These pricing services compile prices from various sources and may apply matrix pricing for similar securities when no price is observable. We review pricing methodologies provided by pricing services to determine if observable market information is being used versus unobservable inputs. When evaluating the appropriateness of an internal trader price, compared with other independent pricing sources, considerations include the range and quality of available information and observability of trade data.

These sources are used to evaluate the reasonableness of a trader price; however, valuing financial instruments involves judgments acquired from knowledge of a particular market. Substantially all of our trading debt securities are recognized using internal trader prices.

AVAILABLE-FOR-SALE DEBT SECURITIES.  AFS debt securities are recognized at fair value on a recurring basis. Fair value measurement for AFS debt securities is based upon various sources of market pricing. Where available, we use quoted prices in active markets. When instruments are traded in secondary markets and quoted prices in active markets do not exist for such securities, we use prices obtained from third-party pricing services and, to a lesser extent, may use prices obtained from independent broker-dealers (brokers), collectively vendor prices that are subject to independent price verification procedures. Substantially all of our AFS debt securities are recognized using vendor prices. See the “Level 3 Asset and Liability Valuation Processes – Vendor Developed Valuations” section in this Note for additional discussion of our processes when using vendor prices to recognize fair value of AFS debt securities, which includes those classified as Level 2 or Level 3 within the fair value hierarchy.

When vendor prices are deemed inappropriate, they may be adjusted based on other market data or internal models. We also use internal models when no vendor prices are available. Internal models use discounted cash flow techniques or market comparable pricing techniques and are subject to independent price verification procedures.

EQUITY SECURITIES. Marketable equity securities and certain nonmarketable equity securities that we have elected to account for at fair value are recognized at fair value on a recurring basis. Our remaining nonmarketable equity securities are subject to nonrecurring fair value adjustments to recognize impairment. Additionally, the carrying value of equity securities accounted for under the measurement alternative is also remeasured to fair value upon the occurrence of orderly observable transactions of the same or similar securities of the same issuer.

We use quoted prices to determine the fair value of
marketable equity securities, as the securities are publicly traded. Quoted prices are typically not available for nonmarketable equity securities. We therefore use other methods, generally market comparable pricing techniques, to determine fair value for such securities. We use all available information in making this determination, which includes observable transaction prices for the same or similar security, prices from third-party pricing services, broker quotes, trading multiples of comparable public companies, and discounted cash flow models. Where appropriate, we make adjustments to observed market data to reflect the comparative differences between the market data and the attributes of our equity securities, such as differences with comparable public companies and other investment-specific considerations like liquidity, marketability or differences in terms of the instruments.


PHYSICAL COMMODITIES INVENTORY. The carrying value of physical commodities inventory approximates fair value. The inventory is recognized at the lower of cost or net realizable value and when designated in a fair value accounting hedge, includes adjustments that result in the asset approximating fair value.

We determine the fair value of exchange-traded physical commodities inventory using observable exchange settlement prices, which represent the prices at which positions are contractually settled through the exchange. Other physical commodities inventory is valued using internal valuation techniques that are subject to independent price verification procedures.

TRADING LOANS AND LOANS HELD FOR SALE (LHFS). Trading loans includes loans held by our trading business that are recognized at fair value on a recurring basis and are classified in trading assets on our consolidated balance sheet. LHFS are non-trading loans classified in other assets on our consolidated balance sheet. LHFS are generally held at LOCOM which may be written down to fair value on a nonrecurring basis, with the exception of certain portfolios where we have elected to recognize the loans at fair value on a recurring basis.

Trading loans and LHFS recognized at fair value on a recurring basis are based on pending transactions when available. Where market pricing data or pending transactions are not available, we use a discounted cash flow model to estimate fair value.

LHFS measured at LOCOM are valued using quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. We may use securitization prices that are adjusted for typical securitization activities including servicing value, portfolio composition, market conditions and liquidity.

LOANS. Although loans are recognized at amortized cost, we recognize nonrecurring fair value adjustments to reflect write-downs that are based on the observable market price of the loan or current appraised value of the collateral less costs to sell.

DERIVATIVES.  Derivatives are recognized at fair value on a recurring basis. Other than certain exchange-traded derivatives that are actively traded and valued using quoted market prices, derivatives are measured using internal valuation techniques that are subject to independent price verification procedures. These instruments, which include derivatives traded in over-the-counter (OTC) markets, with clearinghouses, and on exchanges, are classified as Level 2 or Level 3 of the fair value hierarchy, depending on the significance of unobservable inputs in the valuation. Valuation techniques and inputs to internal models depend on the type of derivative and nature of the underlying rate, price or index upon which the value of the derivative is based. Key inputs can include yield curves, credit curves, foreign exchange rates, prepayment rates, volatility measurements and correlation of certain of these inputs. See the “Level 3 Asset and Liability Valuation Processes – Internal Model Valuations” section in this Note for additional discussion of our processes when using internal models to recognize fair value of derivatives, which includes those classified as Level 2 or Level 3 within the fair value hierarchy.

We incorporate certain adjustments in determining the fair value of our derivatives, including credit valuation adjustments (CVA) to reflect counterparty credit risk related to derivative assets,
debit valuation adjustments (DVA) to reflect Wells Fargo’s own credit risk related to derivative liabilities, and funding valuation adjustments (FVA) to reflect the funding cost of uncollateralized or partially collateralized derivative assets and liabilities. CVA, which considers the effects of enforceable master netting agreements and collateral arrangements, reflects market-based views of the credit quality of each counterparty. We estimate CVA based on observed credits spreads in the credit default swap market and indices indicative of the credit quality of the counterparties to our derivatives.

MORTGAGE SERVICING RIGHTS (MSRs). Residential MSRs are carried at fair value on a recurring basis and are classified in other assets on our consolidated balance sheet. Commercial MSRs are carried at LOCOM and may be written down to fair value on a nonrecurring basis. MSRs do not trade in an active market with readily observable prices. We determine the fair value of MSRs using a valuation model that estimates the present value of expected future net servicing income. The model incorporates assumptions that market participants may use in estimating future net servicing income cash flows, including estimates of prepayment rates (including housing price volatility for residential MSRs), discount rates, and cost to service (including delinquency and foreclosure costs). See the “Level 3 Asset and Liability Valuation Processes – Internal Model Valuations” section in this Note for additional discussion of our processes when using internal models to recognize fair value of residential MSRs, which are classified as Level 3 within the fair value hierarchy.

OTHER ASSETS.  Other assets are generally recognized at amortized cost. We recognize nonrecurring fair value adjustments to reflect impairment or the impact of certain lease modifications. Other assets subject to nonrecurring fair value measurements include operating lease ROU assets, foreclosed assets, and venture capital investments in consolidated portfolio companies. For these assets, fair value is generally based upon independent market prices or appraised values less costs to sell, or the use of a discounted cash flow model.

Liabilities
SECURITIES SOLD, NOT YET PURCHASED. Securities sold, not yet purchased in our trading business are recognized at fair value on a recurring basis and are measured using quoted prices in active markets, where available. When quoted prices for the same instruments are not available or markets are not active, fair values are estimated using recent trades of similar securities.

INTEREST-BEARING DEPOSITS AND LONG-TERM DEBT. Although interest-bearing deposits and long-term debt are generally recognized at amortized cost, we have elected the fair value option for certain structured debt liabilities issued by our trading business. Fair values for these instruments are estimated using a discounted cash flow model that includes both the embedded derivative and debt portions of the instruments. The discount rate used in these discounted cash flow models also incorporates the impact of our credit spread, which is generally based on observable spreads in the secondary bond market.
Level 3 Asset and Liability Valuation Processes
We generally determine fair value of our Level 3 assets and liabilities by using internal models and, to a lesser extent, prices obtained from vendors. Our valuation processes vary depending on which approach is utilized.

INTERNAL MODEL VALUATIONS. Certain Level 3 fair value estimates are based on internal models, such as discounted cash flow or market comparable pricing techniques. Some of the inputs used in these valuations are unobservable. Unobservable inputs are generally derived from or can be correlated to historic performance of similar portfolios or previous market trades in similar instruments where particular unobservable inputs may be implied. We attempt to correlate each unobservable input to historical experience and other third-party data where available. Internal models are subject to review prescribed within our model risk management policies and procedures, which include model validation. Model validation helps ensure our models are appropriate for their intended use and appropriate controls exist to help mitigate risk of invalid valuations. Model validation assesses the adequacy and appropriateness of our models, including reviewing its key components, such as inputs, processing components, logic or theory, output results and supporting model documentation. Validation also includes ensuring significant unobservable model inputs are appropriate given observable market transactions or other market data within the same or similar asset classes. We also have ongoing monitoring procedures in place for our Level 3 assets and liabilities that use internal valuation models. These procedures, which are designed to provide reasonable assurance that models continue to perform as expected, include:
•ongoing analysis and benchmarking to market transactions and other independent market data (including pricing vendors, if available);
•back-testing of modeled fair values to actual realized transactions; and
•review of modeled valuation results against expectations, including review of significant or unusual fluctuations in value.
We update model inputs and methodologies periodically to reflect these monitoring procedures. Additionally, existing models are subject to periodic reviews and we perform full model revalidations as necessary. Internal valuation models are subject to ongoing review by the appropriate principal line of business or enterprise function and monitoring oversight by Independent Risk Management. Independent Risk Management, through its Model Risk function, provides independent oversight of model risk management, and its responsibilities include governance, validation, periodic review, and monitoring of model risk across the Company and providing periodic reports to management and the Board’s Risk Committee.

VENDOR-DEVELOPED VALUATIONS. We routinely obtain pricing from third-party vendors to value our assets or liabilities. In certain limited circumstances, this includes assets and liabilities that we classify as Level 3. We have processes in place to approve and periodically review third-party vendors to assess whether information obtained and valuation techniques used are appropriate. This review may consist of, among other things, obtaining and evaluating control reports issued and pricing methodology materials distributed. We monitor and review vendor prices on an ongoing basis to evaluate whether the fair values are reasonable and in line with market experience in similar asset classes. While the inputs used to determine fair value are not provided by the pricing vendors, and therefore unavailable for our review, we perform one or more of the following procedures to validate the pricing information and determine appropriate classification within the fair value hierarchy:
•comparison to other pricing vendors (if available);
•variance analysis of prices;
•corroboration of pricing by reference to other independent market data, such as market transactions and relevant benchmark indices;
•review of pricing by Company personnel familiar with market liquidity and other market-related conditions; and
•investigation of prices on a specific instrument-by-instrument basis.
Assets and Liabilities Recognized at Fair Value on a Recurring Basis
Table 14.1 presents the balances of assets and liabilities recognized at fair value on a recurring basis.
Table 14.1: Fair Value on a Recurring Basis
December 31, 2025December 31, 2024
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Trading assets (1):
Debt securities:
Securities of U.S. Treasury and federal agencies$51,376 3,421 — 54,797 38,320 3,829 — 42,149 
Collateralized loan obligations— 859 77 936 — 847 80 927 
Corporate debt securities— 19,349 15 19,364 — 17,341 45 17,386 
Federal agency mortgage-backed securities— 69,836 — 69,836 — 52,908 — 52,908 
Non-agency mortgage-backed securities— 1,692 1 1,693 — 1,702 1 1,703 
Other debt securities— 7,236 — 7,236 — 6,132 — 6,132 
Total trading debt securities51,376 102,393 93 153,862 38,320 82,759 126 121,205 
Equity securities (1)32,322 5,948 438,274 13,656 5,344 4 19,004 
Physical commodities inventory (1)3,430 5,677 — 9,107 — 4,787 — 4,787 
Trading loans (1)— 4,813 69 4,882 — 3,569 18 3,587 
Derivative assets (gross):
Interest rate contracts58 21,985 300 22,343 178 28,070 567 28,815 
Commodity contracts38 3,096 113 3,247 — 2,602 39 2,641 
Equity contracts— 20,636 152 20,788 19 15,074 108 15,201 
Foreign exchange contracts— 38,069 2 38,071 — 51,913 43 51,956 
Credit contracts— 51 30 81 — 90 6 96 
Total derivative assets (gross)96 83,837 597 84,530 197 97,749 763 98,709 
Total trading assets prior to derivative netting$87,224 202,668 763 290,655 52,173 194,208 911 247,292 
Derivative netting (2)(62,720)(78,697)
Total trading assets after derivative netting$227,935 168,595 
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies$51,809 — — 51,809 23,285 — — 23,285 
Securities of U.S. states and political subdivisions— 10,383 14 10,397 — 12,018 17 12,035 
Federal agency mortgage-backed securities— 140,080 — 140,080 — 123,029 — 123,029 
Non-agency mortgage-backed securities— 2,124 2 2,126 — 1,804 2 1,806 
Collateralized loan obligations— 7,904 — 7,904 — 2,202 — 2,202 
Other debt securities— 1,040 217 1,257 — 424 197 621 
Total available-for-sale debt securities51,809 161,531 233 213,573 23,285 139,477 216 162,978 
Loans held for sale (1)(3)— 721 107 828 — 964 162 1,126 
Mortgage servicing rights (residential) (3)— — 5,696 5,696 — — 6,844 6,844 
Equity securities (1)1,941 — 67 2,008 3,009 — 43 3,052 
Other assets311 — 161 472 266 — 168 434 
Total assets measured at fair value on a recurring basis$141,285 364,920 7,027 513,232 78,733 334,649 8,344 421,726 
Trading liabilities (1):
Securities sold, not yet purchased (1)$(24,581)(7,261)(2)(31,844)(21,835)(6,643)— (28,478)
Derivative liabilities gross:
Interest rate contracts(65)(22,268)(442)(22,775)(121)(26,844)(4,170)(31,135)
Commodity contracts(79)(4,265)(61)(4,405)— (1,558)(75)(1,633)
Equity contracts — (21,438)(1,276)(22,714)(4)(14,327)(1,275)(15,606)
Foreign exchange contracts— (36,975)(2)(36,977)— (50,886)(39)(50,925)
Credit contracts— (57)(28)(85)— (43)(7)(50)
Total derivative liabilities (gross)(144)(85,003)(1,809)(86,956)(125)(93,658)(5,566)(99,349)
Total trading liabilities prior to derivative netting(24,725)(92,264)(1,811)(118,800)(21,960)(100,301)(5,566)(127,827)
Derivative netting (2)73,332 83,014 
Total trading liabilities after derivative netting$(45,468)(44,813)
Other liabilities (1)— (311)(46)(357)— (266)(52)(318)
Interest-bearing deposits— — — — — (318)— (318)
Long-term debt— (7,082)— (7,082)— (3,495)— (3,495)
Total liabilities measured at fair value on a recurring basis$(24,725)(99,657)(1,857)(126,239)(21,960)(104,380)(5,618)(131,958)
(1)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet, including trading assets and liabilities and short-term borrowings. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)Represents balance sheet netting of derivative asset and liability balances, related cash collateral, and portfolio level valuation adjustments. See Note 13 (Derivatives) for additional information.
(3)Loans held for sale and mortgage servicing rights are included in other assets on our consolidated balance sheet.
Level 3 Assets and Liabilities Recognized at Fair Value on a Recurring Basis
Table 14.2 presents the changes in Level 3 assets and liabilities recognized at fair value on a recurring basis.
Table 14.2: Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis
Net unrealized gains (losses)
related to assets and liabilities held at period end
(in millions)Balance,
beginning
of period		Net gains/(losses) (1)Purchases (2)SalesSettlementsTransfers 
into 
Level 3 (3)		Transfers
out of
Level 3 (4)		Balance,
end of
period		(5)
Year ended December 31, 2025
Trading assets (6):
Debt instruments (7)$144 (31)115 (99)(42)108 (33)162 (20)(8)
Net derivative assets and liabilities:
Interest rate contracts(3,603)1,057 — — 489 (26)1,941 (142)351 
Equity contracts(1,167)(372)2 (2)555 (350)210 (1,124)(71)
Other derivative contracts(33)182 6 (2)(284)16 169 54 94 
Total derivative contracts(4,803)867 8 (4)760 (360)2,320 (1,212)374 (9)
Available-for-sale debt securities216 7 25 (1)(14)— — 233 6 (8)
Mortgage servicing rights (residential) (10)6,844 (487)98 (759)— — — 5,696 257 (11)
Other (6)278 — 44 (43)(16)23 (64)222 (3)(12)
Year ended December 31, 2024
Trading assets (6):
Debt instruments (7)$234 (7)222 (217)(60)155 (183)144 (13)(8)
Net derivative assets and liabilities:
Interest rate contracts(3,567)(2,820)— — 2,802 (9)(9)(3,603)(563)
Equity contracts(1,474)(578)— — 857 (204)232 (1,167)90 
Other derivative contracts43 263 11 (4)(302)(47)3 (33)(34)
Total derivative contracts(4,998)(3,135)11 (4)3,357 (260)226 (4,803)(507)(9)
Available-for-sale debt securities221 18 24 — (18)1 (30)216 20 (8)
Mortgage servicing rights (residential) (10)7,468 (406)94 (312)— — — 6,844 492 (11)
Other (6)337 146 61 (103)(49)22 (136)278 146  (12)
Year ended December 31, 2023
Trading assets (6):
Debt instruments (7)$210 (11)178 (167)(31)151 (96)234 (21)(8)
Net derivative assets and liabilities:
Interest rate contracts(2,582)(2,062)3 (3)2,548 (1,493)22 (3,567)93 
Equity contracts(1,224)(801)— — 521 (108)138 (1,474)(314)
Other derivative contracts9 (52)14 (4)81 (3)(2)43 42 
Total derivative contracts(3,797)(2,915)17 (7)3,150 (1,604)158 (4,998)(179)(9)
Available-for-sale debt securities276 (8)113 (31)(19)304 (414)221 (32)(8)
Mortgage servicing rights (residential) (10)9,310 (1,101)161 (902)— — — 7,468 86 (11)
Other (6)601 131 261 (373)(100)79 (262)337 125 (12)
(1)All amounts represent net gains (losses) included in net income except for AFS debt securities and other assets and liabilities which also included net gains (losses) in other comprehensive income (OCI). Net gains (losses) included in OCI for AFS debt securities were $11 million, $21 million and $(27) million for the years ended December 31, 2025, 2024, and 2023, respectively. Net gains (losses) included in OCI for other assets and liabilities were $(7) million, $(14) million and $(12) million for the years ended December 31, 2025, 2024, and 2023, respectively.
(2)Includes originations of mortgage servicing rights and loans held for sale.
(3)All assets and liabilities transferred into Level 3 were previously classified within Level 2.
(4)All assets and liabilities transferred out of Level 3 are classified as Level 2.
(5)All amounts represent net unrealized gains (losses) related to assets and liabilities held at period end included in net income except for AFS debt securities and other assets and liabilities which also included net unrealized gains (losses) related to assets and liabilities held at period end in OCI. Net unrealized gains (losses) included in OCI for AFS debt securities were $11 million, $22 million and $(28) million for the years ended December 31, 2025, 2024, and 2023. Net unrealized gains (losses) included in OCI for other assets and liabilities were $(7) million, $(14) million and $(12) million for the years ended December 31, 2025, 2024, and 2023, respectively.
(6)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet, including trading assets and liabilities and short-term borrowings, with corresponding changes to our consolidated statement of income. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(7)Includes trading debt securities and trading loans.
(8)Included in net gains from trading and securities on our consolidated statement of income.
(9)Included in mortgage banking income, net gains from trading and securities, and other noninterest income on our consolidated statement of income.
(10)For additional information on the changes in mortgage servicing rights, see Note 6 (Mortgage Banking Activities).
(11)Included in mortgage banking income on our consolidated statement of income.
(12)Included in mortgage banking income and other noninterest income on our consolidated statement of income.
Table 14.3 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value on a recurring basis.
Weighted averages of inputs are calculated using outstanding unpaid principal balances of loans serviced for residential MSRs and notional amounts for derivative instruments.
Table 14.3: Valuation Techniques – Recurring Basis
($ in millions, except cost to service amounts)Fair Value Level 3Valuation TechniqueSignificant
Unobservable Input		Range of Inputs Weighted
Average
December 31, 2025
Mortgage servicing rights (residential)$5,696 Discounted cash flowCost to service per loan (1)$61 -446 96 
Discount rate8.8 -12.5 %9.1 
Prepayment rate (2)5.7 -23.0 8.0 
Net derivative assets and (liabilities):
Interest rate contracts(139)Discounted cash flowDiscount rate2.5 -3.5 3.4 
(3)Discounted cash flowDefault rate0.4 -12.0 2.4 
Loss severity50.0 -50.0 50.0 
Equity contracts(579)Discounted cash flowConversion factor(0.3)-0.0 (0.2)
Weighted average life1.0-4.0yrs1.7
(545)Option modelCorrelation factor(20.0)-98.5 %77.1 
Volatility factor8.0 -105.0 42.7 
December 31, 2024
Mortgage servicing rights (residential)$6,844 Discounted cash flowCost to service per loan (1)$60 -451 103 
Discount rate9.2 -15.5 %10.1 
Prepayment rate (2)6.8 -19.4 8.1 
Net derivative assets and (liabilities):
Interest rate contracts(3,588)Discounted cash flowDiscount rate4.1 -4.2 4.1 
(15)Discounted cash flowDefault rate0.4 -1.1 0.5 
Loss severity50.0 -50.0 50.0 
Equity contracts(758)Discounted cash flowConversion factor(1.4)-0.0 (0.7)
Weighted average life1.0-4.0 yrs 2.0
(409)Option modelCorrelation factor(70.0)-98.9 %65.3 
Volatility factor6.5 -138.0 41.1 
(1)The high end of the range of inputs is for servicing modified loans. For non-modified loans, the range is $61 - $112 at December 31, 2025, and $60 - $162 at December 31, 2024.
(2)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.
The internal valuation techniques used for our Level 3 assets and liabilities, as presented in Table 14.3 and Table 14.6, are described as follows: 
•Discounted cash flow – Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the fair value amount.
•Market comparable pricing – Market comparable pricing valuation techniques are used to determine the fair value of certain instruments by incorporating known inputs, such as recent transaction prices, pending transactions, financial metrics of comparable companies, or prices of other similar investments that require significant adjustment to reflect differences in instrument characteristics.
•Option model – Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return.

The unobservable inputs presented in Table 14.3 and
Table 14.6 are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant based on their quantitative impact to the fair value of the Level 3 asset or liability as well as qualitative factors, such as nature of the instrument, type of valuation technique used, and the significance of the unobservable inputs relative to other
inputs used within the valuation. Following is a description of the significant unobservable inputs provided in these tables. 
•Comparability adjustment – is an adjustment made to observed market data, such as a transaction price to reflect dissimilarities in underlying collateral, issuer, rating, or other factors used within a market valuation approach, expressed as a percentage of an observed price.
•Conversion factor – is the risk-adjusted rate in which a particular instrument may be exchanged for another instrument upon settlement, expressed as a percentage change from a specified rate.
•Correlation factor – is the likelihood of one instrument changing in price relative to another based on an established relationship expressed as a percentage of relative change in price over a period over time.
•Cost to service – is the expected cost per loan of servicing a portfolio of loans, which includes estimates for unreimbursed expenses (including delinquency and foreclosure costs) that may occur as a result of servicing such loan portfolios.
•Default rate – is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate (CDR).
•Discount rate – is a rate of return used to calculate the present value of the future expected cash flow to arrive at the fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, Secured Overnight Financing Rate (SOFR) or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money.
The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity.
•Loss severity – is the estimated percentage of contractual cash flows lost in the event of a default.
•Multiples – are financial ratios of comparable public companies, such as ratios of enterprise value or market value of equity to earnings before interest, depreciation, and amortization (EBITDA), revenue, net income or book value, adjusted to reflect dissimilarities in operational, financial, or marketability to the comparable public company used in a market valuation approach.
•Prepayment rate – is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (CPR).
•Volatility factor – is the extent of change in price an item is estimated to fluctuate over a specified period of time expressed as a percentage of relative change in price over a period over time.
•Weighted average life – is the weighted average number of years an investment is expected to remain outstanding based on its expected cash flows reflecting the estimated date the issuer will call or extend the maturity of the instrument or otherwise reflecting an estimate of the timing of an instrument’s cash flows whose timing is not contractually fixed.

Interrelationships and Uncertainty of Inputs Used in Recurring Level 3 Fair Value Measurements
Usage of the valuation techniques presented in Table 14.3 requires determination of relevant inputs and assumptions, some of which represent significant unobservable inputs. Accordingly, changes in these unobservable inputs may have a significant impact on fair value.

Certain of these unobservable inputs will (in isolation) have a directionally consistent impact on the fair value of the instrument for a given change in that input. Alternatively, the fair value of the instrument may move in an opposite direction for a given change in another input. Where multiple inputs are used within the valuation technique of an asset or liability, a change in one input in a certain direction may be offset by an opposite change in another input having a potentially muted impact to the overall fair value of that particular instrument. Additionally, a change in one unobservable input may result in a change to another unobservable input (that is, changes in certain inputs are interrelated to one another), which may counteract or magnify the fair value impact.
MORTGAGE SERVICING RIGHTS.  The discounted cash flow models used to determine fair value of Level 3 residential MSRs utilize certain significant unobservable inputs including prepayment rate, discount rate and costs to service. An increase in any of these unobservable inputs will reduce the fair value of the MSRs and alternatively, a decrease in any one of these inputs would result in the MSRs increasing in value. Generally, a decrease in discount rates increases the value of MSRs, unless accompanied by a related update to our prepayment rates. The cost to service assumption generally does not increase or decrease based on movements in the discount rate or the prepayment rate. The sensitivity to key assumptions of our residential MSRs is discussed further in Note 6 (Mortgage Banking Activities).

DERIVATIVE INSTRUMENTS.  Level 3 derivative instruments are valued using option pricing and discounted cash flow valuation techniques which use certain significant unobservable inputs to determine fair value. Such inputs consist of discount rate, prepayment rate, default rate, loss severity, volatility factor, weighted average life, conversion factor, and correlation factor.

Level 3 derivative assets (liabilities) where we are long the underlying would decrease (increase) in value upon an increase (decrease) in discount rate, default rate, conversion factor, or loss severity inputs. Conversely, Level 3 derivative assets (liabilities) would generally increase (decrease) in value upon an increase (decrease) in prepayment rate, weighted average life or volatility factor inputs. The inverse of the above relationships would occur for instruments when we are short the underlying. The correlation factor input may have a positive or negative impact on the fair value of derivative instruments depending on the change in fair value of the item the correlation factor references.

Generally, for derivative instruments for which we are subject to changes in the value of the underlying referenced instrument, a change in the assumption used for default rate is accompanied by directionally similar change in the risk premium component of the discount rate (specifically, the portion related to credit risk) and a directionally opposite change in the assumption used for prepayment rates. Unobservable inputs for loss severity, volatility factor, weighted average life, conversion factor, and correlation factor do not increase or decrease based on movements in other significant unobservable inputs for these Level 3 instruments.
Assets and Liabilities Recognized at Fair Value on a
Nonrecurring Basis
Table 14.4 provides the fair value hierarchy and fair value at the date of the nonrecurring fair value adjustment for all assets that were still held as of December 31, 2025 and 2024, and for which
a nonrecurring fair value adjustment was recognized during the years then ended.
Table 14.4: Fair Value on a Nonrecurring Basis
December 31, 2025December 31, 2024
(in millions)Level 2 Level 3 Total Level 2 Level 3 Total 
Loans held for sale (1)$1,846 240 2,086 841 287 1,128 
Loans:
Commercial1,161 — 1,161 1,376 — 1,376 
Consumer96 — 96 91 — 91 
Total loans1,257 — 1,257 1,467 — 1,467 
Equity securities1,001 1,791 2,792 1,451 2,570 4,021 
Other assets (2)89 9 98 172 9 181 
Total assets at fair value on a nonrecurring basis$4,193 2,040 6,233 3,931 2,866 6,797 
(1)Consists of commercial mortgages and residential mortgage – first lien loans.
(2)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet, including trading assets and liabilities. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
Table 14.5 presents the gains (losses) on all assets held at the end of the reporting periods presented for which a nonrecurring
fair value adjustment was recognized in earnings during the respective periods.
Table 14.5: Gains (Losses) on Assets with Nonrecurring Fair Value Adjustments
Year ended December 31,
(in millions)202520242023
Loans held for sale$5 7 (9)
Loans:
Commercial(671)(1,139)(716)
Consumer(388)(516)(706)
Total loans(1,059)(1,655)(1,422)
Equity securities (1)(86)57 (718)
Other assets (2)(3)(47)(150)(168)
Total$(1,187)(1,741)(2,317)
(1)Includes impairment of equity securities and observable price changes related to equity securities accounted for under the measurement alternative.
(2)Includes impairment of operating lease ROU assets, valuation losses on foreclosed real estate, and other collateral owned, and impairment of venture capital investments in consolidated portfolio companies.
(3)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet, including trading assets and liabilities, with corresponding changes to our consolidated statement of income. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
Table 14.6 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets that are measured at fair value on a nonrecurring basis. Weighted averages of inputs for equity securities are calculated using carrying value prior to the nonrecurring fair value measurement.
Table 14.6: Valuation Techniques – Nonrecurring Basis

($ in millions)
Fair Value
Level 3		Valuation
Technique (1)		Significant
Unobservable Input (1)		Range of Inputs
Positive (Negative)		Weighted
Average
December 31, 2025
Equity securities$393 Market comparable pricing
Comparability adjustment
(100.0)-(4.9)%(49.1)
1,398 Market comparable pricingMultiples1.1x-44.1x12.3x
December 31, 2024
Equity securities1,309 Market comparable pricingComparability adjustment(100.0)-2.3 %(36.1)
1,261 Market comparable pricingMultiples0.9x-8.9x2.9x
(1)Refer to the narrative following Table 14.3 for a definition of the valuation technique(s) and significant unobservable inputs used in the valuation of these assets.
Fair Value Option
The fair value option is an irrevocable election, generally only permitted upon initial recognition of financial assets or liabilities, to measure eligible financial instruments at fair value with changes in fair value reflected in earnings. We may elect the fair value option to align the measurement model with how the financial assets or liabilities are managed or to reduce complexity or accounting asymmetry. Following is a discussion of the portfolios for which we elected the fair value option.

TRADING ASSETS. We purchase loans for market-making purposes to support the buying and selling demands of our customers in our trading business. These loans are generally held for a short period of time and managed within parameters of internally approved market risk limits. Fair value measurement best aligns with our risk management practices. Fair value for these loans is generally determined using readily available market data based on recent transaction prices for similar loans.

OTHER ASSETS. Other assets measured at fair value include residential mortgage loan originations for which an active secondary market and readily available market prices exist to reliably support our valuations. We believe fair value measurement for these assets 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. Loan origination fees on these loans are recognized when earned, and related direct loan origination costs are
recognized when incurred. Interest income on these loans is calculated based upon the note rate of the loan and is recognized in interest income.

INTEREST-BEARING DEPOSITS AND LONG-TERM DEBT. We have elected to account for certain structured debt liabilities under the fair value option given fair value accounting better aligns with our risk management practices and reduces complexity.

For interest-bearing deposits and long-term debt carried at fair value, the change in fair value attributable to instrument-specific credit risk is recognized in OCI and all other changes in fair value are recognized in earnings. Interest expense on these structured debt liabilities is calculated using the effective interest method and is recognized in interest expense.

OTHER LIABILITIES. Other liabilities measured at fair value include secured borrowings related to transfers of fractional shares of marketable equity securities to brokerage customers, for which we have elected to apply the fair value option to align with the fair value measurement of the related equity securities.
Table 14.7 reflects differences between the fair value carrying amount of the assets and liabilities for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.
Table 14.7: Fair Value Option
December 31, 2025December 31, 2024
(in millions)Fair value carrying amountAggregate unpaid principalFair value
carrying amount
less aggregate unpaid principal		Fair value carrying amountAggregate unpaid principalFair value
carrying amount
less aggregate
unpaid principal
Trading assets (1)(2)$4,882 5,180 (298)3,587 3,682 (95)
Other assets (1)(2)828 846 (18)1,126 1,182 (56)
Interest-bearing deposits— — — (318)(317)(1)
Other liabilities(311)— (311)(266)— (266)
Long-term debt (3)(7,082)(7,647)565 (3,495)(4,118)623 
(1)Nonaccrual loans and loans 90 days or more past due and still accruing included in trading assets and other assets for which we have elected the fair value option were insignificant at December 31, 2025 and 2024.
(2)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet, including trading assets and liabilities. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(3)Includes zero coupon notes for which the aggregate unpaid principal amount reflects the contractual principal due at maturity.
Table 14.8 reflects amounts included in earnings related to initial measurement and subsequent changes in fair value, by income statement line item, for assets and liabilities for which the fair
value option was elected. Amounts recognized in net interest income are excluded from the table below.
Table 14.8: Gains (Losses) on Changes in Fair Value Included in Earnings
202520242023
(in millions)Mortgage banking noninterest incomeNet gains from trading and securities (1)Other noninterest incomeMortgage banking noninterest income
Net gains from trading and securities
Other noninterest incomeMortgage banking noninterest incomeNet gains from trading and securitiesOther noninterest income
Trading assets (1)$— 12 — — 35 — — 46 (26)
Other assets (1)88 — — 106 — — 230 — — 
Interest-bearing deposits
— — — — (2)— — (22)— 
Other liabilities— — (45)— — (47)— — (38)
Long-term debt— 15 — — 86 — — (81)— 
(1)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet, including trading assets and liabilities, with corresponding changes to our consolidated statement of income. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
For performing loans, instrument-specific credit risk gains or losses are derived principally by determining the change in fair value of the loans due to changes in the observable or implied
credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For nonperforming loans, we attribute all changes in fair value to
instrument-specific credit risk. For trading loans and loans held for sale accounted for under the fair value option, which are included in trading assets and other assets, respectively, on our consolidated balance sheet, instrument-specific credit gains or losses were insignificant for the years ended 2025, 2024, and 2023.

For interest-bearing deposits and long-term debt, instrument-specific credit risk gains or losses represent the impact of changes in fair value due to changes in our credit spread and are generally derived using observable secondary bond market information. These impacts are recognized within the debit valuation adjustments (DVA) in OCI. See Note 24 (Other Comprehensive Income) for additional information.
Disclosures about Fair Value of Financial Instruments
Table 14.9 presents a summary of fair value estimates for financial instruments that are not carried at fair value on a
recurring basis. Some financial instruments are excluded from the scope of this table, such as certain insurance contracts, certain nonmarketable equity securities, and leases. This table also excludes assets and liabilities that are not financial instruments such as the value of the long-term relationships with our deposit, credit card and trust customers, MSRs, premises and equipment, goodwill and deferred taxes.

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in Table 14.9. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled $639 million and $546 million at December 31, 2025 and 2024, respectively.

The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying fair value of the Company.
Table 14.9: Fair Value Estimates for Financial Instruments
Estimated fair value 
(in millions)Carrying amountLevel 1 Level 2 Level 3 Total
December 31, 2025
Financial assets
Cash and due from banks (1)$39,182 39,182 — — 39,182 
Interest-earning deposits with banks (1) 135,028 134,695 333 — 135,028 
Federal funds sold and securities borrowed or purchased under resale agreements (1)193,929 — 193,929 — 193,929 
Held-to-maturity debt securities208,023 2,051 170,490 3,256 175,797 
Loans held for sale (2)2,618 — 2,418 263 2,681 
Loans, net (2)957,037 — 820 931,108 931,928 
Equity securities (cost method)4,323 — — 4,415 4,415 
Total financial assets$1,540,140 175,928 367,990 939,042 1,482,960 
Financial liabilities
Deposits (3)$166,686 — 75,728 90,379 166,107 
Federal funds purchased and securities loaned or sold under repurchase agreements (1)(4)
232,687 — 232,687 — 232,687 
Short-term borrowings (4)18,323 — 18,331 — 18,331 
Long-term debt (5)167,618 — 172,563 1,390 173,953 
Total financial liabilities$585,314 — 499,309 91,769 591,078 
December 31, 2024
Financial assets
Cash and due from banks (1)$37,080 37,080 — — 37,080 
Interest-earning deposits with banks (1)166,281 165,903 378 — 166,281 
Federal funds sold and securities borrowed or purchased under resale agreements (1)105,330 — 105,330 — 105,330 
Held-to-maturity debt securities234,948 2,015 188,756 3,008 193,779 
Loans held for sale1,547 — 1,216 384 1,600 
Loans, net (2)882,361 — 3,211 845,016 848,227 
Equity securities (cost method)3,782 — — 3,868 3,868 
Total financial assets$1,431,329 204,998 298,891 852,276 1,356,165 
Financial liabilities
Deposits (3)$139,547 — 63,497 75,692 139,189 
Federal funds purchased and securities loaned or sold under repurchase agreements (1)(4)
95,235 — 95,235 — 95,235 
Short-term borrowings (4)2,704 — 2,710 — 2,710 
Long-term debt (5)169,567 — 171,747 2,334 174,081 
Total financial liabilities$407,053 — 333,189 78,026 411,215 
(1)Amounts consist of financial instruments for which carrying value approximates fair value.
(2)Excludes lease financing in loans and loans held for sale, net of allowance for credit losses, of $16.4 billion and $16.2 billion at December 31, 2025 and 2024, respectively.
(3)Excludes deposit liabilities with no defined or contractual maturity of $1.3 trillion and 1.2 trillion at December 31, 2025 and 2024, respectively.
(4)In fourth quarter 2025, we changed the presentation of certain items on our consolidated balance sheet. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(5)Excludes obligations under finance leases of $12 million and $16 million at December 31, 2025 and 2024, respectively.