VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2022

Variable Interest Entities

Variable Interest Entities

NOTE 12—VARIABLE INTEREST ENTITIES

The Company, through its subsidiary Alliant, provides alternative investment management services through the syndication of tax credit funds and the joint development of affordable housing projects. To facilitate the syndication and development of affordable housing projects, the Company is involved with the acquisition and/or formation of limited partnerships and joint ventures with investors, property developers, and property managers that are VIEs.

A detailed discussion of the Company’s accounting policies regarding the consolidation of VIEs and significant transactions involving VIEs is included in NOTE 2 and NOTE 17 of the Company’s 2021 Form 10-K.

During 2022, the operating agreements of three of the Company’s joint ventures were amended, resulting in the Company gaining the power to direct the activities that most significantly impact the economic performance of the joint ventures; previously, the Company only held rights to receive the significant economic benefits of the joint ventures. The Company reassessed its consolidation conclusions and determined that it was the primary beneficiary, and as a result, consolidated the joint ventures as of March 31, 2022. As of September 30, 2022 and December 31, 2021, the assets and liabilities of the consolidated tax credit funds were immaterial.

The table below presents the assets and liabilities of the Company’s consolidated joint development VIEs included in the Condensed Consolidated Balance Sheets:

Consolidated VIEs (in thousands)	September 30, 2022		December 31, 2021
Assets:
Cash and cash equivalents	$	387	$	—
Restricted cash		1,817		—
Receivables, net		33,235		—
Other Assets		49,475		54,880
Total assets of consolidated VIEs	$	84,914	$	54,880
Liabilities:
Other liabilities	$	38,114	$	36,480
Total liabilities of consolidated VIEs	$	38,114	$	36,480

The table below presents the carrying value and classification of the Company’s interests in nonconsolidated VIEs included in the Condensed Consolidated Balance Sheets:

Nonconsolidated VIEs (in thousands)	September 30, 2022		December 31, 2021
Assets
Committed investments in tax credit equity	$	214,430	$	177,322
Other assets: Equity-method investments		58,126		74,997
Total interests in nonconsolidated VIEs	$	272,556	$	252,319
Liabilities
Commitments to fund investments in tax credit equity	$	198,073	$	162,747
Total commitments to fund nonconsolidated VIEs	$	198,073	$	162,747
Maximum exposure to losses(1)(2)	$	272,556	$	252,319

(1) Maximum exposure determined as Total interests in nonconsolidated VIEs. The maximum exposure for the Company’s investments in tax credit equity is limited to the carrying value of its investment, as there are no funding obligations or other commitments related to the nonconsolidated VIEs other than the amounts presented in the table above.

(2) Based on historical experience and the underlying expected cash flows from the underlying investment, the maximum exposure of loss is not representative of the actual loss, if any, that the Company may incur.