Citizens is involved in various entities that are considered VIEs, including investments in entities that sponsor affordable housing, renewable energy and economic development projects, and asset-backed securities. In addition, Citizens provides lending facilities to special purpose entities. Citizens’ maximum exposure to loss as a result of its involvement with these entities is limited to the balance sheet carrying amount of its investments, unfunded commitments, and the outstanding principal balance of loans to special purpose entities. The Company does not consolidate any of its investments in these entities. For more details see Note 11 in the Company’s 2022 Form 10-K.


(dollars in millions)	March 31, 2023	December 31, 2022
Lending to special purpose entities included in loans and leases	$4,915	$4,578
LIHTC investments included in other assets	2,228	2,230
LIHTC unfunded commitments included in other liabilities	1,006	1,046
Asset-backed investments included in HTM securities	552	581
Renewable energy wind investments included in other assets	264	374
NMTC investments included in other assets	4	4

Citizens provides lending facilities to third-party sponsored special purpose entities. As of March 31, 2023 and December 31, 2022, the lending facilities had undrawn commitments to extend credit of $2.3 billion and $2.4 billion, respectively. For more information on commitments to extend credit see Note 11.

The purpose of the Company’s LIHTC investments is to assist in achieving the goals of the Community Reinvestment Act and to earn an adequate return of capital.

The Company’s investments in certain 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).

Effective January 1, 2023, the Company made an election to account for its renewable energy wind investments using the proportional amortization method under newly adopted accounting guidance. Under the proportional amortization method, the Company amortizes the initial cost of its qualifying renewable energy wind investments in proportion to the income tax credits and other income tax benefits received in the current period as compared to the total income tax credits and other income tax benefits expected to be received over the life of the investment. The net amortization and income tax credits and other income tax benefits received are included as a component of income tax expense (benefit).

Contingent commitments related to the Company’s renewable energy wind investments were $7 million at March 31, 2023, and are expected to be paid in varying amounts through 2026. These payments are contingent upon the level of electricity production attained by the wind farm relative to its targeted threshold and changes in the production tax credit rates set by the Internal Revenue Service.

The Company participates in the NMTC program which provides a tax incentive for private sector investment into economic development projects and businesses located in low-income communities. The United States Department of the Treasury oversees the program and it is directly administered by the Community Development Financial Institutions Fund.

The Company’s investments in entities that sponsor economic development projects provide income tax credits to offset federal taxable income over a specified period of time. Independent third parties manage these entities and have the power to direct the activities which most significantly affect their performance. Therefore, Citizens is not the primary beneficiary of these entities and does not consolidate these VIEs as a result.

Effective January 1, 2023, the Company made an election to account for its NMTC investments using the proportional amortization method under newly adopted accounting guidance. Under the proportional amortization method, the Company applies a practical expedient and amortizes the initial cost of its qualifying NMTC investments in proportion to the income tax credits received in the current period as compared to the total income tax credits expected to be received over the life of the investment. The net amortization and income tax credits and other income tax benefits received are included as a component of income tax expense (benefit).

The following table summarizes the impact to the Consolidated Statements of Operations relative to the Company’s tax credit programs for which it has elected to apply the proportional amortization method of accounting:


	Three Months Ended March 31,
(dollars in millions)		2023	2022
Tax credits recognized		$87	$61
Other tax benefits recognized		18	15
Amortization		(81)	(64)
Net benefit included in income tax expense		24	12
Other income		1	—
Allocated income (loss) on investments		(3)	—
Net benefit included in noninterest income		(2)	—
Net benefit included in the Consolidated Statements of Operations(1)		$22	$12

(1) Includes the impact of tax credit investments when the election to apply the proportional amortization method was in effect during the periods presented. For 2023, this includes LIHTC, renewable energy wind and NMTC investments, and for 2022, includes LIHTC investments.

The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the three months ended March 31, 2023 and 2022.