Fair Values of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Valuation Assumption Ranges for MSRs

The following table shows the significant valuation assumption ranges for MSRs at December 31, 2018:

	Minimum			Maximum			Weighted Average(a)
Expected prepayment		7	%		17	%		10	%
Option adjusted spread		7			10			8

(a) Determined based on the relative fair value of the related mortgage loans serviced.

Valuation Assumption Ranges for Derivative Commitments

The following table shows the significant valuation assumption ranges for the Company’s derivative commitments to purchase and originate mortgage loans at December 31, 2018:

	Minimum			Maximum			Weighted Average(a)
Expected loan close rate		4	%		100	%		78	%
Inherent MSR value (basis points per loan)		39			206			115

(a) Determined based on the relative fair value of the related mortgage loans.

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

The following table summarizes the balances of assets and liabilities measured at fair value on a recurring basis:     

(Dollars in Millions)	Level 1		Level 2		Level 3		Netting			Total
December 31, 2018
Available-for-sale securities
U.S. Treasury and agencies	$	18,585	$	672	$	–	$	–		$	19,257
Mortgage-backed securities
Residential agency		–		39,752		–		–			39,752
Commercial agency		–		2		–		–			2
Other asset-backed securities		–		403		–		–			403
Obligations of state and political subdivisions		–		6,701		–		–			6,701
Total available-for-sale		18,585		47,530		–		–			66,115
Mortgage loans held for sale		–		2,035		–		–			2,035
Mortgage servicing rights		–		–		2,791		–			2,791
Derivative assets		–		1,427		583		(942	)		1,068
Other assets		392		1,273		–		–			1,665
Total	$	18,977	$	52,265	$	3,374	$	(942	)	$	73,674
Derivative liabilities	$	1	$	1,291	$	503	$	(946	)	$	849
Short-term borrowings and other liabilities(a)		199		1,019		–		–			1,218
Total	$	200	$	2,310	$	503	$	(946	)	$	2,067
December 31, 2017
Available-for-sale securities
U.S. Treasury and agencies	$	22,572	$	729	$	–	$	–		$	23,301
Mortgage-backed securities
Residential agency		–		38,031		–		–			38,031
Commercial agency		–		6		–		–			6
Other asset-backed securities		–		419		–		–			419
Obligations of state and political subdivisions		–		6,358		–		–			6,358
Other		22		–		–		–			22
Total available-for-sale		22,594		45,543		–		–			68,137
Mortgage loans held for sale		–		3,534		–		–			3,534
Mortgage servicing rights		–		–		2,645		–			2,645
Derivative assets		6		1,960		516		(652	)		1,830
Other assets		154		1,163		–		–			1,317
Total	$	22,754	$	52,200	$	3,161	$	(652	)	$	77,463
Derivative liabilities	$	–	$	1,958	$	409	$	(1,130	)	$	1,237
Short-term borrowings and other liabilities(a)		101		894		–		–			995
Total	$	101	$	2,852	$	409	$	(1,130	)	$	2,232

Note: Excluded from the table above are equity investments without readily determinable fair values. The Company has elected to carry these investments at historical cost, adjusted for impairment and any changes resulting from observable price changes for identical or similar investments of the issuer. The aggregate carrying amount of these equity investments was $86 million at December 31, 2018. The Company has not recorded impairments or adjustments for observable price changes on these equity investments during 2018 or on a cumulative basis.    

(a) Primarily represents the Company’s obligation on securities sold short required to be accounted for at fair value per applicable accounting guidance.

Changes in Fair Value for All Assets and Liabilities Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following table presents the changes in fair value for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31:    

(Dollars in Millions)	Beginning of Period Balance		Net Gains (Losses) Included in Net Income			Net Gains (Losses) Included in Other Comprehensive Income (Loss)			Purchases		Sales			Principal Payments			Issuances			Settlements			End of Period Balance		Net Change in Unrealized Gains (Losses) Relating to Assets and Liabilities Held at End of Period
2018
Mortgage servicing rights	$	2,645	$	(232	)(c)	$	–		$	8	$	(27	)	$	–		$	397	(e)	$	–		$	2,791	$	(232	)(c)
Net derivative assets and liabilities		107		21	(d)		–			13		(41	)		–			–			(20	)		80		34	(f)
2017
Available-for-sale securities
Residential non-agency mortgage-backed securities
Prime(a)	$	242	$	–		$	(2	)	$	–	$	(234	)	$	(6	)	$	–		$	–		$	–	$	–
Non-prime(b)		195		–			(17	)		–		(175	)		(3	)		–			–			–		–
Other asset-backed securities		2		–			–			–		(2	)		–			–			–			–		–
Corporate debt securities		9		–			2			–		(11	)		–			–			–			–		–
Total available-for-sale		448		–			(17	)(g)		–		(422	)		(9	)		–			–			–		–
Mortgage servicing rights		2,591		(404	)(c)		–			13		–			–			445	(e)		–			2,645		(404	)(c)
Net derivative assets and liabilities		171		317	(h)		–			1		(10	)		–			–			(372	)		107		(52	)(i)
2016
Available-for-sale securities
Residential non-agency mortgage-backed securities
Prime(a)	$	318	$	(1	)	$	–		$	–	$	–		$	(75	)	$	–		$	–		$	242	$	–
Non-prime(b)		240		(1	)		(2	)		–		–			(42	)		–			–			195		(2	)
Other asset-backed securities		2		–			–			–		–			–			–			–			2		–
Corporate debt securities		9		–			–			–		–			–			–			–			9		–
Total available-for-sale		569		(2	)(j)		(2	)(g)		–		–			(117	)		–			–			448		(2	)
Mortgage servicing rights		2,512		(488	)(c)		–			43		–			–			524	(e)		–			2,591		(488	)(c)
Net derivative assets and liabilities		498		332	(k)		–			2		(14	)		–			–			(647	)		171		(257	)(l)

(a) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool delinquencies and security market spreads).

(b) Includes all securities not meeting the conditions to be designated as prime.

(c) Included in mortgage banking revenue.

(d) Approximately $(139) million included in other noninterest income and $160 million included in mortgage banking revenue.

(e) Represents MSRs capitalized during the period.

(f) Approximately $14 million included in other noninterest income and $20 million included in mortgage banking revenue.

(g) Included in changes in unrealized gains and losses on investment securities available-for-sale.

(h) Approximately $21 million included in other noninterest income and $296 million included in mortgage banking revenue.

(i) Approximately $(77) million included in other noninterest income and $25 million included in mortgage banking revenue.

(j) Approximately $(3) million included in securities gains (losses) and $1 million included in interest income.

(k) Approximately $(77) million included in other noninterest income and $409 million included in mortgage banking revenue.

(l) Approximately $(276) million included in other noninterest income and $19 million included in mortgage banking revenue.

Adjusted Carrying Values for Assets Measured at Fair Value on Nonrecurring Basis

The following table summarizes the balances as of the measurement date of assets measured at fair value on a nonrecurring basis, and still held as of December 31:

	2018								2017
(Dollars in Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Loans(a)	$	–	$	–	$	40	$	40	$	–	$	–	$	150	$	150
Other assets(b)		–		–		57		57		–		–		31		31

(a) Represents the carrying value of loans for which adjustments were based on the fair value of the collateral, excluding loans fully charged-off.     

(b) Primarily represents the fair value of foreclosed properties that were measured at fair value based on an appraisal or broker price opinion of the collateral subsequent to their initial acquisition.

Losses Recognized Related to Nonrecurring Fair Value Measurements of Individual Assets or Portfolios

The following table summarizes losses recognized related to nonrecurring fair value measurements of individual assets or portfolios for the years ended December 31:

(Dollars in Millions)	2018		2017		2016
Loans(a)	$	83	$	171	$	192
Other assets(b)		26		20		32

(a) Represents write-downs of loans which were based on the fair value of the collateral, excluding loans fully charged-off.     

(b) Primarily represents related losses of foreclosed properties that were measured at fair value subsequent to their initial acquisition.

Differences Between Aggregate Fair Value Carrying Amount of MLHFS for which Fair Value Option has been Elected and Aggregate Unpaid Principal Amount Contractually Obligated to Receive at Maturity

The following table summarizes the differences between the aggregate fair value carrying amount of MLHFS for which the fair value option has been elected and the aggregate unpaid principal amount that the Company is contractually obligated to receive at maturity as of December 31:

	2018						2017
(Dollars in Millions)	Fair Value Carrying Amount		Aggregate Unpaid Principal		Carrying Amount Over (Under) Unpaid Principal		Fair Value Carrying Amount		Aggregate Unpaid Principal		Carrying Amount Over (Under) Unpaid Principal
Total loans	$	2,035	$	1,972	$	63	$	3,534	$	3,434	$	100
Nonaccrual loans		2		2		–		1		2		(1	)
Loans 90 days or more past due		–		–		–		1		1		–

Estimated Fair Values of Financial Instruments

The estimated fair values of the Company’s financial instruments as of December 31, are shown in the table below:     

	2018										2017
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
(Dollars in Millions)			Level 1		Level 2		Level 3		Total				Level 1		Level 2		Level 3		Total
Financial Assets
Cash and due from banks	$	21,453	$	21,453	$	–	$	–	$	21,453	$	19,505	$	19,505	$	–	$	–	$	19,505
Federal funds sold and securities purchased under resale agreements		306		–		306		–		306		93		–		93		–		93
Investment securities held-to-maturity		46,050		4,594		40,359		11		44,964		44,362		4,613		39,095		15		43,723
Loans held for sale(a)		21		–		–		21		21		20		–		–		20		20
Loans		282,837		–		–		284,790		284,790		276,507		–		–		279,391		279,391
Other		2,412		–		1,241		1,171		2,412		2,393		–		1,037		1,364		2,401
Financial Liabilities
Time deposits		44,554		–		44,140		–		44,140		33,356		–		33,120		–		33,120
Short-term borrowings(b)		12,921		–		12,678		–		12,678		15,656		–		15,447		–		15,447
Long-term debt		41,340		–		41,003		–		41,003		32,259		–		32,377		–		32,377
Other		1,726		–		–		1,726		1,726		1,556		–		–		1,556		1,556

(a) Excludes mortgages held for sale for which the fair value option under applicable accounting guidance was elected.

(b) Excludes the Company’s obligation on securities sold short required to be accounted for at fair value per applicable accounting guidance.