Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net

12 Months Ended

Dec. 31, 2024

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities [Abstract]

Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net

The CRA encourages banks to meet the credit needs of their communities, particularly low- and moderate-income individuals and neighborhoods. The Company invests in certain affordable housing projects in the form of ownership interests in limited partnerships or limited liability companies that qualify for CRA consideration and tax credits. These entities are formed to develop and operate apartment complexes designed as high-quality affordable housing for lower income tenants throughout the U.S. To fully utilize the available tax credits, each of these entities must meet the affordable housing regulatory requirements for a 15-year minimum compliance period. The Company also invests in small business investment companies and new markets tax credit projects that qualify for CRA consideration, as well as eligible projects that qualify for production, historic and renewable energy tax credits. Investments in new markets tax credits promote development in low-income communities, investments in production and renewable energy tax credits help promote the development of renewable energy sources, and investments in historic tax credits promote the rehabilitation of historic buildings and economic revitalization of the surrounding areas.

The majority of affordable housing partnership, tax credit and CRA investments discussed above are variable interest entities where the Company is a limited partner in these investments, and an unrelated third party is typically the general partner or managing member who has control over the significant activities of these investments. While the Company’s interest in some of the investments may exceed 50% of the outstanding equity interests, the Company does not consolidate these investments due to the general partner’s or managing member’s ability to manage the entity, which is indicative of the general partner’s or managing member’s power over the entity. The Company’s maximum exposure to loss in connection with these partnerships consists of the unamortized investment balance and any tax credits claimed that may become subject to recapture.

The Company records its investments in qualifying affordable housing partnerships, net, using PAM. Following the adoption of ASU 2023-02 on January 1, 2024, the Company elects to account for its tax credit investments using PAM on a program-by-program basis if certain conditions are met.

For the Company’s accounting policies on tax credit investments, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Securities and Affordable Housing Partnership, Tax Credit and CRA Investments, Net in this Form 10-K. For discussion on the Company’s impairment evaluation and monitoring process of tax credit investments, refer to Note 2 — Fair Value Measurement and Fair Value of Financial Instruments — Affordable Housing Partnership, Tax Credit and CRA Investments, Net to the Consolidated Financial Statements in this Form 10-K.

The following table presents the investments and unfunded commitments of the Company’s affordable housing partnership, tax credit, and CRA investments, net as of December 31, 2024 and 2023:



	December 31,
	2024				2023
($ in thousands)	Assets		Liabilities - Unfunded Commitments (1)		Assets		Liabilities - Unfunded Commitments (1)
PAM:
Affordable housing partnership investments	$	500,217	$	280,919	$	419,785	$	251,746
Tax credit and CRA investments	160,429		21,202		—		—
Equity method of accounting and other:
Tax credits and CRA investments	265,994		105,743		485,251		298,990
Total	$	926,640	$	407,864	$	905,036	$	550,736

(1)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

The following table presents additional information related to the investments in affordable housing partnership, tax credit and CRA investments for the years ended December 31, 2024, 2023 and 2022:



	Year Ended December 31,
($ in thousands)	2024		2023		2022
Tax credits and benefits (1):
PAM:
Affordable housing partnership investments	$	70,335	$	60,939	$	52,132
Tax credit and CRA investments	110,260		—		—
Equity method of accounting and other:
Tax credit and CRA investments	64,720		124,433		116,132
Total tax credits and benefits	$	245,315	$	185,372	$	168,264

Amortization:
PAM:
Affordable housing partnership investments (2)	$	46,113	$	43,041	$	38,759
Tax credit and CRA investments (3)	90,113		—		—
Equity method of accounting and other:
Tax credit and CRA investments (4) (5)	54,242		120,299		113,358
Total amortization	$	190,468	$	163,340	$	152,117

(1)Included in Income tax expense on the Consolidated Statement of Income for the years ended December 31, 2024, 2023 and 2022.

(2)Amortization related to investments in qualified affordable housing partnerships under PAM was recorded in Income tax expense on the Consolidated Statement of Income for the years ended December 31, 2024, 2023 and 2022.

(3)Due to the adoption of ASU 2023-02 on January 1, 2024, amortization related to qualifying tax credit investments under PAM was recorded in Income tax expense on the Consolidated Statement of Income for the year ended December 31, 2024.

(4)Amortization related to tax credit and CRA investments was recognized in Amortization of tax credit and CRA investments as part of noninterest expense on the Consolidated Statement Income for the years ended December 31, 2024, 2023 and 2022.

(5)Includes impairment of $1 million for the year ended December 31, 2024, and net impairment recoveries of $1 million and $469 thousand for the years ended December 31, 2023 and 2022, respectively. The activity was primarily related to historic and/or energy tax credits.

As of December 31, 2024, the Company’s unfunded commitments related to investments in affordable housing partnership, tax credit and CRA investments, net are estimated to be funded as follows:



($ in thousands)	Amount
2025	$	304,008
2026	85,995
2027	9,434
2028	1,643
2029	1,306
Thereafter	5,478
Total	$	407,864

The Company also held equity securities without readily determinable fair values totaling $147 million and $146 million as of December 31, 2024 and 2023, respectively. These equity securities without readily determinable fair values are included in Other Assets on the Consolidated Balance Sheet.