VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

VARIABLE INTEREST ENTITIES

The Company makes equity investments in various entities that are considered VIEs, as defined by GAAP. These investments primarily include ownership interests in limited partnerships that sponsor affordable housing projects and ownership interests in limited liability companies that sponsor renewable energy projects. A summary of these investments is as follows:



(in millions)	June 30, 2016		December 31, 2015
LIHTC investment included in other assets		$660		$598
LIHTC unfunded commitments included in other liabilities	365		365
Renewable energy investments included in other assets	117		118

Low Income Housing Tax Credit Partnerships

The purpose of the Company’s equity investments is to assist in achieving goals of the Community Reinvestment Act and to earn an adequate return of capital. The LIHTC partnerships are managed by general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. The Company is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, the Company does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

The Company applies the proportional amortization method to account for its LIHTC investments. Under the proportional amortization method, the initial investment is amortized in proportion to the actual tax credits and other tax benefits to be received in the current period as compared to the total tax credits and other tax benefits expected to be received over the life of the investment. The amortization and tax benefits are included as a component of income tax expense. The Company reports its equity share of affordable housing partnership gains and losses as an adjustment to non-interest income. The Company reports its commitments to make future investments in other liabilities on the Consolidated Balance Sheets. The Company also receives tax credits, which are reported as a reduction of income tax expense (or increase to income tax benefit) related to these transactions.

For the three months ended June 30, 2016, the Company recognized $16 million of amortization expense, $14 million of tax credits and $7 million of other tax benefits associated with these investments in the provision for income taxes. For the six months ended June 30, 2016, the Company recognized $31 million of amortization expense, $29 million of tax credits and $13 million of other tax benefits associated with these investments in the provision for income taxes. For the three months ended June 30, 2015, the Company recognized $12 million of amortization expense, $12 million of tax credits and $5 million of other tax benefits associated with these investments in the provision for income taxes. For the six months ended June 30, 2015, the Company recognized $24 million of amortization expense, $23 million of tax credits and $9 million of other tax benefits associated with these investments in the provision for income taxes. No LIHTC investment impairment losses were recognized during the three and six months ended June 30, 2016 and 2015, respectively

Renewable Energy Entities

The Company’s investments in renewable energy entities provide benefits from a return generated by government incentives plus other tax attributes that are associated with tax ownership (e.g., tax depreciation). As a tax equity investor, the Company does not have the power to direct the activities which most significantly affect the performance of these entities and therefore is not the primary beneficiary of any renewable energy entities. Accordingly, the Company does not consolidate these VIEs.