Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Values of Funds and Unfunded Commitments for Funds

The following table presents the fair value of our indirect investments and related unfunded commitments at September 30, 2013:

September 30, 2013 in millions	Fair Value		Unfunded Commitments
INVESTMENT TYPE
Passive funds (a)	$	13	$	1
Co-managed funds (b)		15		—
Total	$	28	$	1

(a) We invest in passive funds, which are multi-investor private equity funds. These investments can never be redeemed. Instead, distributions are received through the liquidation of the underlying investments in the funds. Some funds have no restrictions on sale, while others require investors to remain in the fund until maturity. The funds will be liquidated over a period of one to seven years.

(b) We are a manager or co-manager of these funds. These investments can never be redeemed. Instead, distributions are received through the liquidation of the underlying investments in the funds. In addition, we receive management fees. We can sell or transfer our interest in any of these funds with the written consent of a majority of the fund’s investors. In one instance, the other co-manager of the fund must consent to the sale or transfer of our interest in the fund. The funds will mature over a period of two to five years.

Fair Value of Assets and Liabilities Measured on Recurring Basis

Certain assets and liabilities are measured at fair value on a recurring basis in accordance with GAAP. The following tables present these assets and liabilities at September 30, 2013, December 31, 2012 and September 30, 2012.

September 30, 2013
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A RECURRING BASIS
Short-term investments:
Securities purchased under resale agreements		—	$	516		—	$	516
Trading account assets:
U.S. Treasury, agencies and corporations		—		616		—		616
States and political subdivisions		—		26		—		26
Collateralized mortgage obligations		—		6		—		6
Other mortgage-backed securities		—		83		—		83
Other securities	$	6		66		—		72
Total trading account securities		6		797		—		803
Commercial loans		—		3		—		3
Total trading account assets		6		800		—		806
Securities available for sale:
States and political subdivisions		—		41		—		41
Collateralized mortgage obligations		—		11,779		—		11,779
Other mortgage-backed securities		—		762		—		762
Other securities		24		—		—		24
Total securities available for sale		24		12,582		—		12,606
Other investments:
Principal investments:
Direct		—		—	$	168		168
Indirect		—		—		417		417
Total principal investments		—		—		585		585
Equity and mezzanine investments:
Direct		—		—		—		—
Indirect		—		—		28		28
Total equity and mezzanine investments		—		—		28		28
Total other investments		—		—		613		613
Derivative assets:
Interest rate		—		1,112		19		1,131
Foreign exchange		60		10		—		70
Energy and commodity		—		137		—		137
Credit		—		2		4		6
Equity		—		—		—		—
Derivative assets		60		1,261		23		1,344
Netting adjustments (a)		—		—		—		(869	)
Total derivative assets		60		1,261		23		475
Accrued income and other assets		—		48		—		48
Total assets on a recurring basis at fair value	$	90	$	15,207	$	636	$	15,064
LIABILITIES MEASURED ON A RECURRING BASIS
Federal funds purchased and securities sold under repurchase agreements:
Securities sold under repurchase agreements		—	$	464		—	$	464
Bank notes and other short-term borrowings:
Short positions	$	4		458		—		462
Derivative liabilities:
Interest rate		—		798		—		798
Foreign exchange		59		10		—		69
Energy and commodity		—		130	$	1		131
Credit		—		10		1		11
Equity		—		—		—		—
Derivative liabilities		59		948		2		1,009
Netting adjustments (a)		—		—		—		(559	)
Total derivative liabilities		59		948		2		450
Accrued expense and other liabilities		—		133		—		133
Total liabilities on a recurring basis at fair value	$	63	$	2,003	$	2	$	1,509

(a) Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with 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.

.

December 31, 2012
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A RECURRING BASIS
Short term investments:
Securities purchased under resale agreements		—	$	271		—	$	271
Trading account assets:
U.S. Treasury, agencies and corporations		—		383		—		383
States and political subdivisions		—		21	$	3		24
Collateralized mortgage obligations		—		8		—		8
Other mortgage-backed securities		—		4		—		4
Other securities	$	2		175		—		177
Total trading account securities		2		591		3		596
Commercial loans		—		9		—		9
Total trading account assets		2		600		3		605
Securities available for sale:
States and political subdivisions		—		49		—		49
Collateralized mortgage obligations		—		11,464		—		11,464
Other mortgage-backed securities		—		538		—		538
Other securities		43		—		—		43
Total securities available for sale		43		12,051		—		12,094
Other investments:
Principal investments:
Direct		—		—		191		191
Indirect		—		—		436		436
Total principal investments		—		—		627		627
Equity and mezzanine investments:
Direct		—		—		—		—
Indirect		—		—		41		41
Total equity and mezzanine investments		—		—		41		41
Total other investments		—		—		668		668
Derivative assets:
Interest rate		—		1,705		19		1,724
Foreign exchange		54		21		—		75
Energy and commodity		—		154		2		156
Credit		—		3		5		8
Equity		—		—		—		—
Derivative assets		54		1,883		26		1,963
Netting adjustments (a)		—		—		—		(1,270	)
Total derivative assets		54		1,883		26		693
Accrued income and other assets		—		3		—		3
Total assets on a recurring basis at fair value	$	99	$	14,808	$	697	$	14,334
LIABILITIES MEASURED ON A RECURRING BASIS
Federal funds purchased and securities sold under repurchase agreements:
Securities sold under repurchase agreements		—	$	228		—	$	228
Bank notes and other short-term borrowings:
Short positions		—		287		—		287
Derivative liabilities:
Interest rate		—		1,152		—		1,152
Foreign exchange	$	55		20		—		75
Energy and commodity		—		149	$	1		150
Credit		—		9		1		10
Equity		—		—		—		—
Derivative liabilities		55		1,330		2		1,387
Netting adjustments (a)		—		—		—		(803	)
Total derivative liabilities		55		1,330		2		584
Accrued expense and other liabilities		—		49		—		49
Total liabilities on a recurring basis at fair value	$	55	$	1,894	$	2	$	1,148

(a) Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with 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.

September 30, 2012
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A RECURRING BASIS
Short term investments:
Securities purchased under resale agreements		—	$	294		—	$	294
Trading account assets:
U.S. Treasury, agencies and corporations		—		486		—		486
States and political subdivisions		—		14	$	56		70
Collateralized mortgage obligations		—		4		—		4
Other mortgage-backed securities		—		9		1		10
Other securities	$	10		78		—		88
Total trading account securities		10		591		57		658
Commercial loans		—		5		—		5
Total trading account assets		10		596		57		663
Securities available for sale:
States and political subdivisions		—		54		—		54
Collateralized mortgage obligations		—		11,283		—		11,283
Other mortgage-backed securities		—		597		1		598
Other securities		27		—		—		27
Total securities available for sale		27		11,934		1		11,962
Other investments:
Principal investments:
Direct		—		—		214		214
Indirect		—		—		455		455
Total principal investments		—		—		669		669
Equity and mezzanine investments:
Direct		—		—		—		—
Indirect		—		—		42		42
Total equity and mezzanine investments		—		—		42		42
Total other investments		—		—		711		711
Derivative assets:
Interest rate		—		1,841		23		1,864
Foreign exchange		52		29		—		81
Energy and commodity		—		183		—		183
Credit		—		14		5		19
Equity		—		—		—		—
Derivative assets		52		2,067		28		2,147
Netting adjustments (a)		—		—		—		(1,376	)
Total derivative assets		52		2,067		28		771
Accrued income and other assets		—		138		—		138
Total assets on a recurring basis at fair value	$	89	$	15,029	$	797	$	14,539
LIABILITIES MEASURED ON A RECURRING BASIS
Federal funds purchased and securities sold under repurchase agreements:
Securities sold under repurchase agreements		—	$	398		—	$	398
Bank notes and other short-term borrowings:
Short positions	$	4		384		—		388
Derivative liabilities:
Interest rate		—		1,283		—		1,283
Foreign exchange		56		27		—		83
Energy and commodity		—		177	$	1		178
Credit		—		17		1		18
Equity		—		—		—		—
Derivative liabilities		56		1,504		2		1,562
Netting adjustments (a)		—		—		—		(905	)
Total derivative liabilities		56		1,504		2		657
Accrued expense and other liabilities		1		—		—		1
Total liabilities on a recurring basis at fair value	$	61	$	2,286	$	2	$	1,444

(a) Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with 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.

Change in Fair Values of Level 3 Financial Instruments

Changes in Level 3 Fair Value Measurements

The following table shows the change in the fair values of our Level 3 financial instruments for the three and nine months ended September 30, 2013, and 2012. We mitigate the credit risk, interest rate risk, and risk of loss related to many of these Level 3 instruments by using securities and derivative positions classified as Level 1 or Level 2. Level 1 and Level 2 instruments are not included in the following table. Therefore, the gains or losses shown do not include the impact of our risk management activities.

in millions	Beginning of Period Balance		Gains (Losses) Included in Earnings			Purchases		Sales			Settlements			Transfers into Level 3  (e)			Transfers out of Level 3 (e)			End of Period Balance (g)			Unrealized Gains (Losses) Included in Earnings
Nine months ended September 30, 2013
Trading account assets
Other mortgage-backed securities		—	$	4	(b)		—	$	(4	)		—			—			—			—			—
Other securities		—		4	(b)		—		—		$	(4	)		—			—			—		$	(1	) (b)
State and political subdivisions	$	3		—			—		(3	)		—			—			—			—			—
Other investments
Principal investments
Direct		191		(9	) (c)	$	7		(21	)		—			—			—		$	168			(19	) (c)
Indirect		436		37	(c)		14		(70	)		—			—			—			417			13	(c)
Equity and mezzanine investments
Direct		—		—			—		—			—			—			—			—			8	(c)
Indirect		41		1	(c)		—		—			(14	)		—			—			28			1	(c)
Derivative instruments (a)
Interest rate		19		(10	) (d)		—		(1	)		—		$	39	(f)	$	(28	) (f)		19			—
Energy and commodity		1		(2	) (d)		—		—			—			—			—			(1	)		—
Credit		4		(6	) (d)		—		—			5			—			—			3			—
Three months ended September 30, 2013
Trading account assets
Other mortgage-backed securities		—		—			—		—			—			—			—			—			—
Other securities		—	$	1	(b)		—		—		$	(1	)		—			—			—		$	(2	) (b)
State and political subdivisions		—		—			—		—			—			—			—			—			—
Other investments
Principal investments
Direct	$	186		(4	) (c)	$	3	$	(17	)		—			—			—		$	168			(8	) (c)
Indirect		426		18	(c)		3		(30	)		—			—			—			417			9	(c)
Equity and mezzanine investments
Direct		—		—			—		—			—			—			—			—			5	(c)
Indirect		32		(1	) (c)		—		—			(3	)		—			—			28			(1	) (c)
Derivative instruments (a)
Interest rate		25		(7	) (d)		—		—			—			—		$	1	(f)		19			—
Energy and commodity		1		(2	) (d)		—		—			—			—			—			(1	)		—
Credit		4		(3	) (d)		—		—			2			—			—			3			—

in millions	Beginning of Period Balance			Gains (Losses) Included in Earnings			Purchases			Sales			Settlements			Transfers into Level 3  (e)			Transfers out of Level 3 (e)			End of Period Balance (g)			Unrealized Gains (Losses) Included in Earnings
Nine months ended September 30, 2012
Trading account assets
Other mortgage-backed securities	$	35		$	2	(b)		—		$	(32	)		—			—		$	(4	)	$	1			—
Other securities		—			2	(b)		—			—		$	(3	)	$	57	(h)		—			56		$	2	(b)
Other investments
Principal investments
Direct		225			12	(c)	$	11			(34	)		—			—			—			214			10	(c)
Indirect		473			50	(c)		24			(92	)		—			—			—			455			21	(c)
Equity and mezzanine investments
Direct		15			3	(c)		—			—			(18	)		—			—			—			15	(c)
Indirect		36			6	(c)		4			—			(4	)		—			—			42			6	(c)
Derivative instruments (a)
Interest rate		38			(5	) (d)		1			(7	)		—			7			(11	)		23			—
Energy and commodity		(1	)		1	(d)		(1	)		—			—			—			—			(1	)		—
Credit		(21	)		(11	) (d)		—			—			37			—			—			5			—
Three months ended September 30, 2012
Trading account assets
Other mortgage-backed securities	$	1			—			—			—			—			—			—		$	1			—
Other securities		57		$	4	(b)		—			—		$	(5	)		—			—			56		$	4	(b)
Other investments
Principal investments
Direct		231			4	(c)	$	1		$	(22	)		—			—			—			214			2	(c)
Indirect		482			7	(c)		4			(38	)		—			—			—			455			(7	) (c)
Equity and mezzanine investments
Direct		18			—			—			—			(18	)		—			—			—			5	(c)
Indirect		43			—			—			—			—		$	(1	)		—			42			—
Derivative instruments (a)
Interest rate		35			(2	) (d)		—			(6	)		—			3		$	(7	)		23			—
Energy and commodity		(1	)		—			—			—			—			—			—			(1	)		—
Credit		5			(4	) (d)		—			—			4			—			—			5			—

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

(b) Realized and unrealized gains and losses on trading account assets are reported in “other income” on the income statement.

(c) Realized and unrealized gains and losses on principal investments and private equity and mezzanine investments are reported in “net gains (losses) from principal investing” on the income statement.

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

(e) Our policy is to recognize transfers into and transfers out of Level 3 as of the end of the reporting period.

(f) Transfers from Level 2 to Level 3 were the result of Level 3 unobservable inputs becoming significant to certain derivatives previously classified as Level 2. Transfers from Level 3 to Level 2 were the result of Level 3 unobservable inputs becoming less significant to certain derivatives previously classified as Level 3.

(g) There were no issuances for the nine-month periods ended September 30, 2013 and 2012.

(h) Transfers from Level 2 to Level 3 were the result of decreased observable market activity for these securities.

Assets Measured at Fair Value on Nonrecurring Basis

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in accordance with GAAP. The adjustments to fair value generally result from the application of accounting guidance that requires assets and liabilities to be recorded at the lower of cost or fair value, or assessed for impairment. The following table presents our assets measured at fair value on a nonrecurring basis at September 30, 2013, December 31, 2012, and September 30, 2012:

	September 30, 2013
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A NONRECURRING BASIS
Impaired loans		—		—	$	26	$	26
Loans held for sale (a)		—		—		—		—
Accrued income and other assets		—	$	1		10		11
Total assets on a nonrecurring basis at fair value		—		1	$	36	$	37

	December 31, 2012
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A NONRECURRING BASIS
Impaired loans		—		—	$	25	$	25
Loans held for sale (a)		—		—		9		9
Accrued income and other assets		—	$	2		20		22
Total assets on a nonrecurring basis at fair value		—	$	2	$	54	$	56

	September 30, 2012
in millions	Level 1		Level 2		Level 3		Total
ASSETS MEASURED ON A NONRECURRING BASIS
Impaired loans		—		—	$	52	$	52
Loans held for sale (a)		—		—		10		10
Accrued income and other assets		—	$	15		22		37
Total assets on a nonrecurring basis at fair value		—	$	15	$	84	$	99

(a) During the first nine months of 2013, we transferred $2 million of commercial and consumer loans and leases at their current fair value from held-for-sale status to the held-to-maturity portfolio compared to $17 million during 2012, and $17 million during the first nine months ended September 30, 2012.

Quantitative Information about Level 3 Fair Value Measurements

The range and weighted-average of the significant unobservable inputs used to fair value our material Level 3 recurring and nonrecurring assets at September 30, 2013, December 31, 2012, and September 30, 2012, along with the valuation techniques used, are shown in the following table:

September 30, 2013	Fair Value of			Significant	Range
dollars in millions	Level 3 Assets		Valuation Technique	Unobservable Input	(Weighted-Average)
Recurring
Other investments	$	168	Individual analysis of the condition of each investment
— principal investments — direct:
Debt instruments				EBITDA multiple	5.80 - 7.20% (6.00%)
Equity instruments of private companies				EBITDA multiple (where applicable)	4.70 - 9.60% (6.30%)
				Revenue multiple (where applicable)	1.00 - 4.80% (4.10%)
Nonrecurring
Impaired loans		26	Fair value of underlying collateral	Discount	10.00 - 100.00% (35.00%)
Goodwill		979	Discounted cash flow and market data	Earnings multiple of peers	9.70 - 14.20 (11.25)
				Equity multiple of peers	.95 - 1.17 (1.09)
				Control premium	N/A (30.00%)
				Weighted-average cost of capital	N/A (13.00%)

December 31, 2012	Fair Value of			Significant	Range
dollars in millions	Level 3 Assets		Valuation Technique	Unobservable Input	(Weighted-Average)
Recurring
Other investments	$	181	Individual analysis of the condition of each investment
— principal investments — direct:
Debt instruments				EBITDA multiple	5.50 - 6.00% (5.90%)
Equity instruments of private companies				EBITDA multiple (where applicable)	5.00 - 8.50% (6.10%)
				Revenue multiple (where applicable)	0.30 - 5.70% (4.80%)
Nonrecurring
Impaired loans		25	Fair value of underlying collateral	Discount	0.00 - 100.00% (45.00%)
Goodwill		979	Discounted cash flow and market data	Earnings multiple of peers	9.70 - 14.20 (11.25)
				Equity multiple of peers	.95 - 1.17 (1.09)
				Control premium	N/A (30.00%)
				Weighted-average cost of capital	N/A (13.00%)

September 30, 2012	Fair Value of			Significant	Range
dollars in millions	Level 3 Assets		Valuation Technique	Unobservable Input	(Weighted-Average)
Recurring
Other investments	$	202	Individual analysis of the condition of each investment
— principal investments — direct:
Debt instruments				EBITDA multiple	4.90 - 6.00% (5.90%)
Equity instruments of private companies				EBITDA multiple (where applicable)	5.50 - 10.80% (6.10%)
				Revenue multiple (where applicable)	0.20 - 4.40% (2.80%)
Nonrecurring
Impaired loans		52	Fair value of underlying collateral	Discount	0.00 - 100.00% (35.00%)
Goodwill		979	Discounted cash flow and market data	Earnings multiple of peers	8.30 - 11.90 (10.01)
				Equity multiple of peers	1.21 - 1.32 (1.27)
				Control premium	N/A (32.00%)
				Weighted-average cost of capital	N/A (15.00%)

Fair Value Disclosures of Financial Instruments

Fair Value Disclosures of Financial Instruments

The levels in the fair value hierarchy ascribed to our financial instruments and the related carrying amounts at September 30, 2013, December 31, 2012, and September 30, 2012 are shown in the following table.

	September 30, 2013
			Fair Value
in millions	Carrying Amount		Level 1		Level 2		Level 3		Netting Adjustment			Total
ASSETS
Cash and short-term investments (a)	$	4,283	$	3,767	$	516		—		—		$	4,283
Trading account assets (e)		806		6		800		—		—			806
Securities available for sale (e)		12,606		24		12,582		—		—			12,606
Held-to-maturity securities (b)		4,835		—		4,730		—		—			4,730
Other investments (e)		1,007		—		394	$	613		—			1,007
Loans, net of allowance (c)		52,729		—		—		51,301		—			51,301
Loans held for sale (e)		699		—		—		699		—			699
Mortgage servicing assets (d)		331		—		—		388		—			388
Derivative assets (e)		475		60		1,261		23	$	(869	) (f)		475
LIABILITIES
Deposits with no stated maturity (a)	$	61,399		—	$	61,399		—		—		$	61,399
Time deposits (d)		7,136		605		6,632		—		—			7,237
Short-term borrowings (a)		1,921	$	4		1,917		—		—			1,921
Long-term debt (d)		6,154		6,192		265		—		—			6,457
Derivative liabilities (e)		450		59		948	$	2	$	(559	) (f)		450

	December 31, 2012
			Fair Value
in millions	Carrying Amount		Level 1		Level 2		Level 3		Netting Adjustment			Total
ASSETS
Cash and short-term investments (a)	$	4,525	$	4,254	$	271		—		—		$	4,525
Trading account assets (e)		605		2		600	$	3		—			605
Securities available for sale (e)		12,094		43		12,051		—		—			12,094
Held-to-maturity securities (b)		3,931		—		3,992		—		—			3,992
Other investments (e)		1,064		—		396		668		—			1,064
Loans, net of allowance (c)		51,934		—		—		51,046		—			51,046
Loans held for sale (e)		599		—		—		599		—			599
Mortgage servicing assets (d)		204		—		—		238		—			238
Derivative assets (e)		693		54		1,883		26	$	(1,270	) (f)		693
LIABILITIES
Deposits with no stated maturity (a)	$	58,132		—	$	58,132		—		—		$	58,132
Time deposits (d)		7,861	$	408		7,612		—		—			8,020
Short-term borrowings (a)		1,896		—		1,896		—		—			1,896
Long-term debt (d)		6,847		2,807		4,585		—		—			7,392
Derivative liabilities (e)		584		54		1,331	$	2	$	(803	) (f)		584

	September 30, 2012
			Fair Value
in millions	Carrying Amount		Level 1		Level 2		Level 3		Netting Adjustment			Total
ASSETS
Cash and short-term investments (a)	$	3,182	$	2,888	$	294		—		—		$	3,182
Trading account assets (e)		663		10		596	$	57		—			663
Securities available for sale (e)		11,962		27		11,934		1		—			11,962
Held-to-maturity securities (b)		4,153		—		4,212		—		—			4,212
Other investments (e)		1,106		—		395		711		—			1,106
Loans, net of allowance (c)		50,531		—		—		49,737		—			49,737
Loans held for sale (e)		628		—		—		628		—			628
Mortgage servicing assets (d)		188		—		—		237		—			237
Derivative assets (e)		771		52		2,067		28	$	(1,376	) (f)		771
LIABILITIES
Deposits with no stated maturity (a)	$	55,452		—	$	55,452		—		—		$	55,452
Time deposits (d)		8,736	$	569		8,344		—		—			8,913
Short-term borrowings (a)		2,134		4		2,130		—		—			2,134
Long-term debt (d)		6,119		2,819		3,777		—		—			6,596
Derivative liabilities (e)		657		56		1,504	$	2	$	(905	) (f)		657

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) 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 they are reasonable and consistent with the values placed on similar securities traded in the secondary markets.

(c) 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.

(d) Fair values of mortgage servicing assets, time deposits and long-term debt are based on discounted cash flows utilizing relevant market inputs.

(e) 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 Measured at Fair Value on a Nonrecurring Basis” in this note.

(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 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.