Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities Measured on Recurring Basis

The following tables present these assets and liabilities at March 31, 2019, and December 31, 2018.

	March 31, 2019									December 31, 2018
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
in millions
ASSETS MEASURED ON A RECURRING BASIS
Trading account assets:
U.S. Treasury, agencies and corporations	—		$	746	—		$	746		—		$	578	—		$	578
States and political subdivisions	—		46		—		46			—		60		—		60
Other mortgage-backed securities	—		85		—		85			—		164		—		164
Other securities	1		68		—		69			—		22		—		22
Total trading account securities	1		945		—		946			—		824		—		824
Commercial loans	—		33		—		33			—		25		—		25
Total trading account assets	1		978		—		979			—		849		—		849
Securities available for sale:
U.S. Treasury, agencies and corporations	—		270		—		270			—		147		—		147
States and political subdivisions	—		6		—		6			—		7		—		7
Agency residential collateralized mortgage obligations	—		14,080		—		14,080			—		13,962		—		13,962
Agency residential mortgage-backed securities	—		2,143		—		2,143			—		2,105		—		2,105
Agency commercial mortgage-backed securities	—		4,330		—		4,330			—		3,187		—		3,187
Other securities	—		—		$	25	25			—		—		$	20	20
Total securities available for sale	—		20,829		25		20,854			—		19,408		20		19,428
Other investments:
Principal investments:
Direct	—		—		1		1			—		—		1		1
Indirect (measured at NAV) (a)	—		—		—		83			—		—		—		96
Total principal investments	—		—		1		84			—		—		1		97
Equity investments:
Direct	—		1		8		9			—		1		7		8
Direct (measured at NAV) (a)	—		—		—		1			—		—		—		1
Indirect (measured at NAV) (a)	—		—		—		9			—		—		—		9
Total equity investments	—		1		8		19			—		1		7		18
Total other investments	—		1		9		103			—		1		8		115
Loans, net of unearned income (residential)	—		—		3		3			—		—		3		3
Loans held for sale (residential)	—		70		1		71			—		54		—		54
Derivative assets:
Interest rate	—		526		3		529			—		410		5		415
Foreign exchange	$	45	31		—		76			$	70	$	36	$	—	$	106
Commodity	—		233		—		233			—		333		—		333
Credit	—		1		—		1			—		1		—		1
Other	—		7		4		11			—		6		3		9
Derivative assets	45		798		7		850			70		786		8		864
Netting adjustments (b)	—		—		—		(324		)	—		—		—		(333		)
Total derivative assets	45		798		7		526			70		786		8		531
Accrued income and other assets	—		—		—		—			—		—		—		—
Total assets on a recurring basis at fair value	$	46	$	22,676	$	45	$	22,536		$	70	$	21,098	$	39	$	20,980
LIABILITIES MEASURED ON A RECURRING BASIS
Bank notes and other short-term borrowings:
Short positions	$	10	$	669	—		$	679		$	14	$	530	—		$	544
Derivative liabilities:
Interest rate	—		237		—		237			—		297		—		297
Foreign exchange	36		32		—		68			58		37		—		95
Commodity	—		223		—		223			—		323		—		323
Credit	—		2		$	1	3			—		1		—		1
Other	—		8		—		8			—		7		—		7
Derivative liabilities	36		502		1		539			58		665		—		723
Netting adjustments (b)	—		—		—		(336		)	—		—		—		(337		)
Total derivative liabilities	36		502		1		203			58		665		—		386
Accrued expense and other liabilities	—		—		—		—			—		—		—		—
Total liabilities on a recurring basis at fair value	$	46	$	1,171	$	1	$	882		$	72	$	1,195	—		$	930

(a) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

(b)

Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The net basis takes into account the impact of bilateral collateral and master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral. Total derivative assets and liabilities include these netting adjustments.

Fair Value Measurement Inputs and Valuation Techniques

Asset/liability class	Valuation technique	Valuation hierarchy classification(s)
Other direct equity investments	Fair value is determined using: • Discounted cash flows • Operating performance and market/exit multiples of comparable businesses • Other unique facts and circumstances related to each individual investment For level 3 securities, increases (decreases) in the discount rate and marketability discount used in the discounted cash flow models would have resulted in lower (higher) fair value measurements. Higher volatility factors would have further magnified changes in fair value. Level 2 investments reflect the price of recent investments, which is deemed representative of fair value.	Level 2 and 3
Other direct and indirect equity investments (NAV)	Certain direct investments do not have readily determinable fair values and qualify for the practical expedient in the accounting guidance that allows us to estimate fair value based upon net asset value per share.	NAV
Loans held for sale and held for investment (residential)	Residential mortgage loans held for sale are accounted for at fair value. The election of the fair value option aligns the accounting for these assets with the related forward loan sale commitments. Fair values are based on: • Quoted market prices, where available • Prices for other traded mortgage loans with similar characteristics • Purchase commitments and bid information received from market participants Prices are adjusted as necessary to include: • The embedded servicing value in the loans • The specific characteristics of certain loans that are priced based on the pricing of similar loans. (These adjustments represent unobservable inputs to the valuation but are not considered significant given the relative insensitivity of the value to changes in these inputs to the fair value of the loans.) Residential loans held for investment: Certain residential loans held for sale contain salability exceptions that make them unable to be sold into the performing loan sales market. Loans in this category are transferred to the held to maturity loan portfolio and are included in “Loans, net of unearned income” on the balance sheet. This type of loan is classified as level 3 in the valuation hierarchy as transaction details regarding sales of this type of loan are often unavailable. Fair value is based upon: • Unobservable bid information from brokers and investors Higher (lower) unobservable bid information would have resulted in higher (lower) fair value measurements.	Level 1, 2 and 3 (primarily level 2)
Derivatives	Exchange-traded derivatives are valued using quoted prices in active markets and, therefore, are classified as Level 1 instruments. The majority of our derivative positions are level 2 and are valued using internally developed models based on market convention and observable market inputs. These derivative contracts include interest rate swaps, certain options, floors, cross currency swaps, credit default swaps, and forward mortgage loan sale commitments. Significant inputs used in the valuation models include: • Interest rate curves • Yield curves • LIBOR and Overnight Index Swap (OIS) discount rates • LIBOR and OIS curves, index pricing curves, foreign currency curves • Volatility surfaces (a three-dimensional graph of implied volatility against strike price and maturity)	Level 1, 2, and 3 (primarily level 2)

Asset/liability class	Valuation technique	Valuation hierarchy classification(s)
Derivatives (continued)	We have several customized derivative instruments and risk participations that are classified as Level 3 instruments. These derivative positions are valued using internally developed models, with inputs consisting of available market data, such as: • Bond spreads and asset values The unobservable internally derived assumptions include: • Loss probabilities • Internal risk ratings of customers The fair value represents an estimate of the amount that the risk participation counterparty would need to pay/receive as of the measurement date based on the probability of customer default on the swap transaction and the fair value of the underlying customer swap. Therefore, higher (lower) loss probabilities and internal risk ratings would have resulted in a lower (higher) fair value measurement of the risk participations. A directionally similar change would have also applied to other customized derivative instruments classified as Level 3. We use interest rate lock commitments for our residential mortgage business, which are classified as Level 3 instruments. The significant components of the valuation model include: • Interest rates observable in the market • Investor supplied prices for similar securities • The probability of the loan closing (i.e. the "pull-through" amount, a significant unobservable input). Increases (decreases) in the probability of the loan closing would have resulted in higher (lower) fair value measurements. Valuation of residential mortgage forward sale commitments utilizes observable market prices of comparable commitments and mortgage securities (Level 2).	Level 1, 2, and 3 (primarily level 2)
Liability for short positions	This includes fixed income securities held by our broker dealer in its trading inventory. Fair value of level 1 securities is determined by: • Quoted market prices available in an active market for identical securities Fair value of level 2 securities is determined by: • Observable market prices of similar securities • Market activity, spreads, credit ratings and interest rates for each security type	Level 1 and 2

The following table describes the valuation techniques and significant inputs used to measure the significant classes of assets and liabilities reported at fair value on a nonrecurring basis, as well as the classification of each within the valuation hierarchy.

Asset/liability class	Valuation technique	Valuation hierarchy classification(s)
Impaired loans and leases	Loans are evaluated for impairment on a quarterly basis; impairment typically occurs when there is evidence of a probable loss and the expected value of the loan is less than the contractual value of the loan.  The amount of the impairment may be determined based on the estimated present value of future cash flows, the fair value of the underlying collateral (Level 3), or the loan’s observable market price based on recent sales of similar loans and collateral (Level 2). Cash flow analysis considers internally developed inputs including: • Discount rates • Default rates • Changes in collateral values and costs of foreclosure	Level 2 and 3
Commercial loans held for sale	Through a quarterly analysis of our loan portfolios held for sale, which include both performing and nonperforming commercial loans, we determine any adjustments necessary to record the portfolios at the lower of cost or fair value in accordance with GAAP. Valuation inputs include: • Non-binding bids for the respective loans or similar loans • Recent sales transactions • Internal models that emulate recent securitizations	Level 2 and 3

Asset/liability class	Valuation technique	Valuation hierarchy classification(s)
Direct financing leases and operating lease assets held for sale	Valuations of direct financing leases and operating lease assets held for sale are performed using an internal model that relies on market data, including: • Swap rates and bond ratings • Our own assumptions about the exit market for the leases • Details about the individual leases in the portfolio Leases for which we receive a current nonbinding bid, and for which the sale is considered probable, may be classified as Level 2. Valuations of lease and operating lease assets held for sale that employ our own assumptions are classified as Level 3 assets. The inputs based on our own assumptions include changes in the value of leased items and internal credit ratings.	Level 2 and 3
OREO and other repossessed personal property	OREO and other repossessed properties are valued based on: • Appraisals and third-party price opinions, less estimated selling costs  Generally, we classify these assets as Level 3, but OREO and other repossessed properties for which we receive binding purchase agreements are classified as Level 2. Returned lease inventory is valued based on market data for similar assets and is classified as Level 2.	Level 2 and 3
LIHTC, HTC, and NMTC investments	Valuation of LIHTC, HTC and NMTC involves measuring the present value of future tax benefits and comparing that value against the current carrying value of the investment. Expected future tax benefit are discounted to their present value using discounted cash flow modeling that incorporates an appropriate risk premium. LIHTC and HTC investments are impaired when it is more likely than not that the carrying amount of the investment will not be realized.	Level 3
Other equity investments	We have other investments in equity securities that do not have readily determinable fair values and do not qualify for the practical expedient to measure the investment using a net asset value per share. We have elected to measure these securities at cost less impairment plus or minus adjustments due to observable orderly transactions. Impairment is recorded when there is evidence that the expected fair value of the investment has declined to below the recorded cost. At each reporting period, we assess if these investments continue to qualify for this measurement alternative. At March 31, 2019, and December 31, 2018, the carrying amount of equity investments under this method was $127 million and $107 million, respectively. No impairment was recorded for the three months ended March 31, 2019.	Level 3
Mortgage Servicing Rights	Refer to Note 8. Mortgage Servicing Assets	Level 3

The following table describes the valuation techniques and significant inputs used to measure the classes of assets and liabilities reported at fair value on a recurring basis, as well as the classification of each within the valuation hierarchy.

Asset/liability class	Valuation technique	Valuation hierarchy classification(s)
Securities (trading account assets and available for sale)	Fair value of level 1 securities is determined by: • Quoted market prices available in an active market for identical securities. This includes exchange-traded equity securities. Fair value of level 2 securities is determined by: • Pricing models (either by a third party pricing service or internally). Inputs include: yields, benchmark securities, bids, offers, actual trade data (i.e., spreads, credit ratings, and interest rates) for comparable assets, spread tables, matrices, high-grade scales, and option-adjusted spreads. • Observable market prices of similar securities. Fair value of level 3 securities is determined by: • Internal models, principally discounted cash flow models (income approach). • Revenue multiples of comparable public companies (market approach). For level 3 securities, increases (decreases) in the discount rate and marketability discount used in the discounted cash flow models would have resulted in lower (higher) fair value measurements. Higher volatility factors would have further magnified changes in fair value. The valuations provided by the third-party pricing service are based on observable market inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, bids, offers, and reference data obtained from market research publications. Inputs used by the third-party pricing service in valuing CMOs and other mortgage-backed securities also include new issue data, monthly payment information, whole loan collateral performance, and “To Be Announced” prices. In valuations of securities issued by state and political subdivisions, inputs used by the third-party pricing service also include material event notices.	Level 1, 2, and 3 (primarily Level 2)
Commercial loans (trading account assets)	Fair value is based on: • Observable market price spreads for similar loans. Valuations reflect prices within the bid-ask spread that are most representative of fair value.	Level 2
Principal investments (direct)	Direct principal investments consist of equity and debt instruments of private companies made by our principal investing entities. Fair value is determined using: • Operating performance and market multiples of comparable businesses • Other unique facts and circumstances related to each individual investment Direct principal investments are accounted for as investment companies in accordance with the applicable accounting guidance, whereby each investment is adjusted to fair value with any net realized or unrealized gain/loss recorded in the current period’s earnings. We are in the process of winding down our direct principal investment portfolio. As of March 31, 2019, the balance is less than $1 million.	Level 3
Principal investments (indirect)	Indirect principal investments include primary and secondary investments in private equity funds engaged mainly in venture- and growth-oriented investing. These investments do not have readily determinable fair values and qualify for the practical expedient to estimate fair value based upon net asset value per share (or its equivalent, such as member units or an ownership interest in partners’ capital to which a proportionate share of net assets is attributed). Indirect principal investments are also accounted for as investment companies, whereby each investment is adjusted to fair value with any net realized or unrealized gain/loss recorded in the current period’s earnings. Under the provisions of the Volcker Rule, we are required to dispose or conform our indirect investments to the requirements of the statute by no later than July 21, 2022. As of March 31, 2019, we have not committed to a plan to sell these investments. Therefore, these investments continue to be valued using the net asset value per share methodology.	NAV

Fair Value of Direct and Indirect Investments, Related Unfunded Commitments and Financial Support Provided

The following table presents the fair value of our direct and indirect principal investments and related unfunded commitments at March 31, 2019, as well as financial support provided for the three months ended March 31, 2019, and March 31, 2018.

					Financial support provided
					Three months ended March 31,
	March 31, 2019				2019				2018
in millions	Fair Value		Unfunded Commitments		Funded Commitments		Funded Other		Funded Commitments	Funded Other
INVESTMENT TYPE
Direct investments	$	1	—		—		$	1	—	—
Indirect investments (measured at NAV) (a)	83		$	25	$	1	—		—	—
Total	$	84	$	25	1		$	1	—	—

 

(a)

Our indirect investments consist of buyout funds, venture capital funds, and fund of funds. These investments are generally not redeemable. Instead, distributions are received through the liquidation of the underlying investments of the fund. An investment in any one of these funds typically can be sold only with the approval of the fund’s general partners. At March 31, 2019, no significant liquidation of the underlying investments has been communicated to Key. The purpose of funding our capital commitments to these investments is to allow the funds to make additional follow-on investments and pay fund expenses until the fund dissolves. We, and all other investors in the fund, are obligated to fund the full amount of our respective capital commitments to the fund based on our and their respective ownership percentages, as noted in the applicable Limited Partnership Agreement.

Change in Fair Values of Level 3 Financial Instruments

The following table shows the components of the change in the fair values of our Level 3 financial instruments for the three months ended March 31, 2019, and March 31, 2018. 

in millions	Beginning of Period Balance		Gains (Losses) Included in Other Comprehensive Income		Gains (Losses) Included in Earnings			Purchases			Sales			Settlements	Transfers Other		Transfers into Level 3			Transfers out of Level 3				End of Period Balance			Unrealized Gains (Losses) Included in Earnings
Three months ended March 31, 2019
Securities available for sale
Other securities	$	20	$	5	—			—			—			—	—		—			—				$	25		—
Other investments
Principal investments
Direct	1		—		—		(a)	$	1		$	(1	)	—	—		—			—				1			—	(a)
Equity investments
Direct	7		—		—			—			—			—	—		$	1		—				8			—
Loans held for sale	—		—		—			—			—			—	$	1	—			—				1			—
Loans held for investment	3		—		—			—			—			—	—		—			—				3			—
Derivative instruments (b)
Interest rate	5		—		$	1	(c)	—			—			—	—		1		(d)	$	(4	)	(d)	3			—
Credit	—		—		—		(c)	(1		)	—			—	—		—			—				(1		)	—
Other (e)	3		—		—			—			—			—	1		—			—				4			—

in millions	Beginning of Period Balance		Gains (Losses) Included in Other Comprehensive Income		Gains (Losses) Included in Earnings				Purchases	Sales	Settlements		Transfers Other		Transfers into Level 3			Transfers out of Level 3				End of Period Balance		Unrealized Gains (Losses) Included in Earnings
Three months ended March 31, 2018
Securities available for sale
Other securities	$	20	—		—				—	—	—		—		—			—				$	20	—
Other investments
Principal investments
Direct	13		$	—	$	(1	)	(a)	—	—	—		—		—			—				12		$	(1	)	(a)
Equity investments
Direct	3		—		—				—	—	—		—		$	4		—				7		—
Loans held for sale	1		—		—				—	—	—		—		—			—				1		—
Loans held for investment (residential)	2		—		—				—	—	—		—		—			—				2		—
Derivative instruments (b)
Interest rate	9		—		(1		)	(c)	—	—	—		—		1		(d)	$	(5	)	(d)	4		—
Credit	1		—		(5		)	(c)	—	—	$	4	—		—			—				—		—
Other (e)	3		—		—				—	—	—		$	—	—			—				3		—

(a) Realized and unrealized gains and losses on principal investments are reported in “other income” on the income statement.

(b) Amounts represent Level 3 derivative assets less Level 3 derivative liabilities.

(c) Realized and unrealized gains and losses on derivative instruments are reported in “corporate services income” and “other income” on the income statement.

(d) Certain derivatives previously classified as Level 2 were transferred to Level 3 because Level 3 unobservable inputs became significant. Certain derivatives previously classified as Level 3 were transferred to Level 2 because Level 3 unobservable inputs became less significant.

(e)

Amounts represent Level 3 interest rate lock commitments.

Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

The following table presents our assets measured at fair value on a nonrecurring basis at March 31, 2019, and December 31, 2018:

	March 31, 2019							December 31, 2018
in millions	Level 1	Level 2		Level 3		Total		Level 1	Level 2		Level 3		Total
ASSETS MEASURED ON A NONRECURRING BASIS
Impaired loans and leases	—	$	—	$	17	$	17	—	—		$	42	$	42
Accrued income and other assets	—	—		2		2		—	$	—	16		16
Total assets on a nonrecurring basis at fair value	—	$	—	$	19	$	19	—	$	—	$	58	$	58

Quantitative Information about Level 3 Fair Value Measurements

The following table describes the significant unobservable inputs of our level 3 assets and liabilities:

March 31, 2019	Level 3 Asset (Liability)			Valuation Technique	Significant Unobservable Input	Range (Weighted-Average) (b), (c)
dollars in millions
Recurring
Securities available-for-sale:
Other investments	$	25		Discounted cash flows	Discount rate	14.34 - 15.01% (14.62%)
					Marketability discount	N/A (30.00%)
					Volatility factor	37.00 - 42.00% (39.93%)
Other investments:(a)
Equity investments
Direct	8			Discounted cash flows	Discount rate	14.83 - 17.59% (15.72%)
					Marketability discount	N/A (30.00%)
					Volatility factor	N/A (49.00%)
Loans held for sale (residential)	1			Market comparable pricing	Comparability factor	80.50 - 97.00% (86.74%)
Loans held for investment (residential)	3			Market comparable pricing	Comparability factor	77.57 - 94.75% (89.50%)
Derivative instruments:
Interest rate	3			Discounted cash flows	Probability of default	.02 - 100% (2.1%)
					Internal risk rating	1 - 19 (8.80)
					Loss given default	0 - 1 (.49)
Credit	(1		)	Discounted cash flows	Probability of default	.02 - 100% (2.57%)
					Internal risk rating	1 - 19 (9.32)
					Loss given default	0 - 1 (.50)
Other(d)	4			Discounted cash flows	Loan closing rates	35.93 - 99.69% (76.10%)
Nonrecurring
Impaired loans	$	17		Fair value of underlying collateral	Discount rate	20.00 - 50.00% (23.00%)
Accrued income and other assets:
OREO and other Level 3 assets	$	2		Appraised value	Appraised value	N/M

December 31, 2018	Level 3 Asset (Liability)		Valuation Technique	Significant Unobservable Input	Range (Weighted-Average(b)(c))
dollars in millions
Nonrecurring
Impaired loans	$	42	Fair value of underlying collateral	Discount rate	20.00 - 40.00% (21.00%)

(a) Principal investments, direct is excluded from this table as the balance at March 31, 2019, is insignificant (less than $1 million).

(b) The weighted average of significant unobservable inputs is calculated using a weighting relative to fair value.

(c) For significant unobservable inputs with no range, a single figure is reported to denote the single quantitative factor used.

(d)

Amounts represent interest rate lock commitments.

Fair Value Disclosures of Financial Instruments

The levels in the fair value hierarchy ascribed to our financial instruments and the related carrying amounts at March 31, 2019, and December 31, 2018, are shown in the following tables. Assets and liabilities are further arranged by measurement category.

	March 31, 2019
			Fair Value
in millions	Carrying Amount		Level 1		Level 2		Level 3		Measured at NAV		Netting Adjustment				Total
ASSETS (by measurement category)
Fair value - net income
Trading account assets (b)	$	979	$	1	$	978	—		—		—				$	979
Other investments (b)	646		—		1		$	552	$	93	—				646
Loans, net of unearned income (d)	3		—		—		3		—		—				3
Loans held for sale (b)	71		—		70		1		—		—				71
Derivative assets - trading (b)	489		45		774		7		—		$	(337	)	(f)	489
Fair value - OCI
Securities available for sale (b)	20,854		—		20,829		$	25	—		—				20,854
Derivative assets - hedging (b)(g)	37		—		24		—		—		13			(f)	37
Amortized cost
Held-to-maturity securities (c)	11,234		—		10,997		—		—		—				10,997
Loans, net of unearned income (d)	89,292		—		—		87,378		—		—				87,378
Loans held for sale (b)	823		—		—		823		—		—				823
Other
Cash and short-term investments (a)	3,122		3,122		—		—		—		—				3,122
LIABILITIES (by measurement category)
Fair value - net income
Derivative liabilities - trading (b)	$	198	$	36	$	492	1		—		$	(331	)	(f)	$	198
Fair value - OCI
Derivative liabilities - hedging (b)(g)	5		—		10		—		—		(5		)	(f)	5
Amortized cost
Time deposits (e)	13,969		—		14,076		—		—		—				14,076
Short-term borrowings (a)	945		$	10	935		—		—		—				945
Long-term debt (e)	14,168		13,235		1,222		—		—		—				14,457
Other
Deposits with no stated maturity (a)	94,206		—		94,206		—		—		—				94,206

	December 31, 2018
				Fair Value
in millions	Carrying Amount			Level 1		Level 2			Level 3		Measured at NAV		Netting Adjustment				Total
ASSETS (by measurement category)
Fair value - net income
Trading account assets (b)	$	849		—		$	849		—		—		—				$	849
Other investments (b)	666			—		1			$	559	$	106	—				666
Loans, net of unearned income (d)	3			—		—			3		—		—				3
Loans held for sale (b)	54			—		54			—		—		—				54
Derivative assets - trading (b)	462			$	68	736			8		—		$	(350	)	(f)	462
Fair value - OCI
Securities available for sale (b)	19,428			—		19,408			20		—		—				19,428
Derivative assets - hedging (b)(g)	69			2		50			—		—		17			(f)	69
Amortized cost
Held-to-maturity securities (c)	11,519			—		11,122			—		—		—				11,122
Loans, net of unearned income (d)	88,666			—		—			86,224		—		—				86,224
Loans held for sale (b)	1,173			—		—			1,173		—		—				1,173
Other
Cash and short-term investments (a)	3,240			3,240		—			—		—		—				3,240
LIABILITIES (by measurement category)
Fair value - net income
Derivative liabilities - trading (b)	$	395		$	58	$	675		—		—		$	(338	)	(f)	$	395
Fair value - OCI
Derivative liabilities - hedging (b)(g)	(9		)	—		(10		)	—		—		1			(f)	(9		)
Amortized cost
Time deposits (e)	13,245			—		13,331			—		—		—				13,331
Short-term borrowings (a)	863			14		849			—		—		—				863
Long-term debt (e)	13,732			12,576		$	1,211		—		—		—				13,787
Other
Deposits with no stated maturity (a)	94,064			—		94,064			—		—		—				94,064

Valuation Methods and Assumptions

(a) Fair value equals or approximates carrying amount. The fair value of deposits with no stated maturity does not take into consideration the value ascribed to core deposit intangibles.

(b) Information pertaining to our methodology for measuring the fair values of these assets and liabilities is included in the sections entitled “Qualitative Disclosures of Valuation Techniques” and “Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis” in this Note. Investments accounted for under the cost method (or cost less impairment adjusted for observable price changes for certain equity investments) are classified as Level 3 assets. These investments are not actively traded in an open market as sales for these types of investments are rare. The carrying amount of the investments carried at cost are adjusted for declines in value if they are considered to be other-than-temporary (or due to observable orderly transactions of the same issuer for equity investments eligible for the cost less impairment measurement alternative). These adjustments are included in “other income” on the income statement.

(c) Fair values of held-to-maturity securities are determined by using models that are based on security-specific details, as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, interest rate spreads on relevant benchmark securities, and certain prepayment assumptions. We review the valuations derived from the models to ensure that they are reasonable and consistent with the values placed on similar securities traded in the secondary markets.

(d) The fair value of loans is based on the present value of the expected cash flows. The projected cash flows are based on the contractual terms of the loans, adjusted for prepayments and use of a discount rate based on the relative risk of the cash flows, taking into account the loan type, maturity of the loan, liquidity risk, servicing costs, and a required return on debt and capital. In addition, an incremental liquidity discount is applied to certain loans, using historical sales of loans during periods of similar economic conditions as a benchmark. The fair value of loans includes lease financing receivables at their aggregate carrying amount, which is equivalent to their fair value.

(e) Fair values of time deposits and long-term debt are based on discounted cash flows utilizing relevant market inputs.

(f) Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The net basis takes into account the impact of bilateral collateral and master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral. Total derivative assets and liabilities include these netting adjustments.

(g)

Derivative assets-hedging and derivative liabilities-hedging includes both cash flow and fair value hedges. Additional information regarding our accounting policies for cash flow and fair value hedges is provided in Note 1 (“1. Summary of Significant Accounting Policies”) under the heading “Derivatives and Hedging” beginning on page 103 of our 2018 Form 10-K.