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

3 Months Ended

Mar. 31, 2025

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 elects to account for its tax credit investments using the proportional amortization method (“PAM”) on a program-by-program basis if certain conditions are met. For the Company’s accounting policies on PAM, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Income Taxes to the Consolidated Financial Statements in the Company’s 2024 Form 10-K. For discussion on the Company’s impairment evaluation and monitoring process for 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-Q.

The following table presents the investments and unfunded commitments of the Company’s affordable housing partnership, tax credit, and CRA investments, net as of March 31, 2025 and December 31, 2024:



	March 31, 2025				December 31, 2024
($ in thousands)	Assets		Liabilities - Unfunded Commitments (1)		Assets		Liabilities - Unfunded Commitments (1)

PAM:
Affordable housing partnership investments	$	484,810	$	260,242	$	500,217	$	280,919
Tax credit and CRA investments	149,923		21,202		160,429		21,202
Equity method of accounting and other:
Tax credits and CRA investments	295,325		101,139		265,994		105,743
Total	$	930,058	$	382,583	$	926,640	$	407,864

(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 three months ended March 31, 2025 and 2024:



	Three Months Ended March 31,
($ in thousands)	2025		2024
Tax credits and benefits (1):
PAM:
Affordable housing partnership investments	$	19,662	$	18,419
Tax credit and CRA investments	17,633		27,149
Equity method of accounting and other:
Tax credit and CRA investments	12,005		12,594
Total tax credits and benefits	$	49,300	$	58,162

Amortization:
PAM (2):
Affordable housing partnership investments	$	15,406	$	13,869
Tax credit and CRA investments	12,864		23,301
Equity method of accounting and other:
Tax credit and CRA investments (3)	15,742		13,207
Total amortization	$	44,012	$	50,377

(1)Included in Income tax expense on the Consolidated Statement of Income.

(2)For affordable housing partnership, tax credit and CRA investments that are qualified for accounting under PAM, amortization is included in Income tax expense on the Consolidated Statement of Income.

(3)For tax credit and CRA investments that are not accounted for under PAM, amortization is included in Amortization of tax credit and CRA investments as part of Noninterest expense on the Consolidated Statement Income.

The Company also held equity securities without readily determinable fair values totaling $151 million and $147 million as of March 31, 2025 and December 31, 2024, respectively. Equity securities without readily determinable fair values are included in Other Assets and Affordable housing partnership, tax credit and CRA investments, net on the Consolidated Balance Sheet.