Fair Value

3 Months Ended

Mar. 31, 2024

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For more information about our valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 3 of our 2023 Form 10-K.

Fair Value Hierarchy

The following schedule presents assets and liabilities measured at fair value on a recurring basis:


(In millions)	March 31, 2024
	Level 1		Level 2		Level 3		Total
ASSETS
Available-for-sale securities:
U.S. Treasury, agencies, and corporations	$	481	$	8,167	$	—	$	8,648
Municipal securities			1,259				1,259

Other debt securities			24				24
Total available-for-sale	481		9,450		—		9,931
Trading securities			59				59
Other noninterest-bearing investments:
Bank-owned life insurance			555				555
Private equity investments 1	3				98		101
Other assets:
Agriculture loan servicing					19		19

Deferred compensation plan assets	130						130
Derivatives			481				481
Total assets	$	614	$	10,545	$	117	$	11,276
LIABILITIES
Securities sold, not yet purchased	$	76	$	—	$	—	$	76
Other liabilities:
Derivatives			388				388
Total liabilities	$	76	$	388	$	—	$	464

1 The Level 1 private equity investments (“PEIs”) relate to the portion of our Small Business Investment Company (“SBIC”) investments that are publicly traded.


(In millions)	December 31, 2023
	Level 1		Level 2		Level 3		Total
ASSETS
Available-for-sale securities:
U.S. Treasury, agencies, and corporations	$	492	$	8,467	$	—	$	8,959
Municipal securities			1,318				1,318

Other debt securities			23				23

Total available-for-sale	492		9,808		—		10,300
Trading securities			48				48
Other noninterest-bearing investments:
Bank-owned life insurance			553				553
Private equity investments 1	3				92		95
Other assets:
Agriculture loan servicing					19		19
Loans held for sale			43				43
Deferred compensation plan assets	124						124
Derivatives			420				420
Total assets	$	619	$	10,872	$	111	$	11,602
LIABILITIES
Securities sold, not yet purchased	$	65	$	—	$	—	$	65
Other liabilities:
Derivatives			333				333
Total liabilities	$	65	$	333	$	—	$	398

1 The Level 1 PEIs relate to the portion of our SBIC investments that are publicly traded.

Level 3 Valuations

Our Level 3 financial instruments include PEIs and agriculture loan servicing. For additional information regarding our Level 3 financial instruments, including the methods and significant assumptions used to estimate their fair value, see Note 3 of our 2023 Form 10-K.

Roll-forward of Level 3 Fair Value Measurements

The following schedule presents a roll-forward of assets and liabilities that are measured at fair value on a recurring basis using Level 3 inputs:


	Level 3 Instruments
	Three Months Ended
	March 31, 2024				March 31, 2023
(In millions)	Private equity investments		Ag loan servicing		Private equity investments		Ag loan servicing

Balance at beginning of period	$	92	$	19	$	81	$	14

Other noninterest income (expense)	—		—		—		4
Purchases	7		—		1		—
Cost of investments sold	(1)		—		—		—

Transfers out	—		—		—		—
Balance at end of period	$	98	$	19	$	82	$	18

The roll-forward of Level 3 instruments includes the following realized gains and losses recognized in “Securities gains (losses), net” on the consolidated statement of income for the periods presented:


(In millions)	Three Months Ended
	March 31, 2024		March 31, 2023


Securities gains (losses), net	$	2	$	—

Nonrecurring Fair Value Measurements

Certain assets and liabilities may be measured at fair value on a nonrecurring basis, including impaired loans that have been measured based on the fair value of the underlying collateral, other real estate owned (“OREO”), and equity investments without readily determinable fair values. Nonrecurring fair value adjustments generally include changes in value resulting from observable price changes for equity investments without readily determinable fair values, write-downs of individual assets, or the application of lower of cost or fair value accounting. At March 31, 2024, we had $2 million of collateral-dependent loans classified in Level 2, and we recognized less than $1 million of losses from fair value changes related to these loans. For additional information regarding assets and liabilities measured at fair value on a nonrecurring basis, see Note 3 of our 2023 Form 10-K.

Fair Value of Certain Financial Instruments

The following schedule presents the carrying values and estimated fair values of certain financial instruments:


	March 31, 2024					December 31, 2023
(In millions)	Carrying value		Fair value		Level	Carrying value		Fair value		Level
Financial assets:
Held-to-maturity investment securities	$	10,209	$	10,105	2	$	10,382	$	10,466	2
Loans and leases (including loans held for sale), net of allowance	57,422		55,502		3	57,148		54,832		3
Financial liabilities:
Time deposits	10,221		10,179		2	9,996		9,964		2


Long-term debt	544		498		2	542		494		2

The preceding schedule does not include certain financial instruments that are recorded at fair value on a recurring basis, as well as certain financial assets and liabilities for which the carrying value approximates fair value. For additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value, see Note 3 of our 2023 Form 10-K.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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