Note 10—GUARANTEES AND COLLATERAL

Guarantees

Guarantee obligations are recorded through “Other liabilities.”

The following table summarizes guarantees, by type, at September 30, 2013 and December 31, 2012:

	September 30, 2013				December 31, 2012
(in thousands)	Maximum Exposure		Carrying Amount		Maximum Exposure		Carrying Amount
Indemnification contracts	$	26,178	$	1,281	$	26,178	$	1,531
Other		–		–		376		34
Total	$	26,178	$	1,281	$	26,554	$	1,565

Indemnification Contracts

The Company entered into indemnification contracts with the purchaser of the tax credit equity (“TCE”) business related to the guarantees of the investor yields on their investment in certain LIHTC Funds and indemnifications related to property performance on certain Lower Tier Property Partnerships. The Company made no cash payments related to these indemnification agreements for the nine months ended September 30, 2013 or 2012. The carrying amount represents the amount of unamortized fees received related to these guarantees with no additional amounts recognized as management does not believe it is probable that it will have to make payments under these indemnifications. However, it is possible that certain performance guarantees could result in the Company having to pay up to $1.5 million between now and 2017.

The Company’s maximum exposure under its indemnification contracts represents the maximum loss the Company could incur under its guarantee agreements and is not indicative of the likelihood of the expected loss under the guarantee. The Company also has guarantees associated with the LIHTC Funds that were not sold to the purchaser of the TCE business. See Note 16, “Consolidated Funds and Ventures” for information on these guarantees.

Other

In 2009, the Company entered into a loss sharing agreement with the purchaser of the Agency Lending business which was settled during the first quarter of 2013. See Note 3, “Investments in Preferred Stock” for information on this guarantee.

Collateral and restricted assets

The following table summarizes assets that are either pledged or restricted for the Company’s use at September 30, 2013 and December 31, 2012. This table also reflects certain assets held by CFVs in order to reconcile to the Company’s consolidated balance sheets.

		September 30, 2013
(in thousands)	Note Ref.	Restricted Cash		Bonds Available- for-sale		Real Estate Held-for- Use		Real Estate Held-for- Sale		Investment in Preferred stock		Other Assets		Total Assets Pledged
Notes payable	A	$	–	$	–	$	1,735	$	–	$	–	$	11,728	$	13,463
Other	B		35,004		132,930		13,860		–		31,371		326		213,491
CFVs	C		55,945		–		103,649		51,836		–		23,714		235,144
Total		$	90,949	$	132,930	$	119,244	$	51,836	$	31,371	$	35,768	$	462,098

		December 31, 2012
(in thousands)	Note Ref.	Restricted Cash		Bonds Available- for-sale		Real Estate Held-for- Use		Other Assets		Total Assets Pledged
Notes payable	A	$	13		–		1,735		14,302		16,050
Other	B		1,341		59,354		13,402		389		74,486
CFVs	C		53,957		–		111,931		17,568		183,456
Senior interests in and debt owed to securitization trusts	D		2		865,992		2,619		–		868,613
Total		$	55,313	$	925,346	$	129,687	$	32,259	$	1,142,605

A.	The Company pledges bonds, loans, investments in preferred stock, investments in solar facilities and an investment in a mixed-use real estate development as collateral for notes payable.

B.	The Company pledges collateral in connection with secured borrowings, derivative transactions, other liabilities, guarantee exposure and leases. The Company may elect to pledge collateral on behalf of the Company’s customers in order to facilitate credit and other collateral requirements. In addition, cash may be restricted for funding obligations.

C.	These are assets held by CFVs. The real estate serves as collateral to bonds eliminated in consolidation.

D.	Includes assets held by bond securitization trusts as well as assets pledged as collateral for bond securitizations.