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Variable Interest Entities
12 Months Ended
Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Variable Interest Entities Variable Interest Entities
Webster has an investment interest in the following entities that each meet the definition of a variable interest entity.
Consolidated
Rabbi Trust. The Company established a Rabbi Trust to satisfy its obligations due under the Deferred Compensation Plan for Directors and Officers and to mitigate expense volatility. The funding of the Rabbi Trust and the discontinuation of the Deferred Compensation Plan for Directors and Officers occurred during 2012.
Investments held in the Rabbi Trust consist primarily of mutual funds that invest in equity and fixed income securities. Webster is considered the primary beneficiary of the Rabbi Trust as it has the power to direct the activities of the Rabbi Trust that most significantly impact its economic performance and it has the obligation to absorb losses and/or right to receive benefits of the Rabbi Trust that could potentially be significant.
The Rabbi Trust's assets and the Company's deferred compensation plan obligation are included in accrued interest receivable and other assets and accrued expenses and other liabilities, respectively, on the accompanying Consolidated Balance Sheets. Investment earnings, including appreciation (depreciation) in fair value, and changes in the deferred compensation obligation, are included in other non-interest income and compensation and benefits, respectively, on the accompanying Consolidated Statements of Income. Information regarding the fair value of investments held in the Rabbi Trust can be found within Note 18: Fair Value Measurements.
Non-Consolidated
Tax Credit Finance Investments. Webster makes non-marketable equity investments in entities that sponsor affordable housing and other community development projects that qualify for the Low Income Housing Tax Credit Program pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is not only to assist the Bank in meeting its responsibilities under the CRA, but also to provide a return, primarily through the realization of tax benefits. While Webster's investment in an entity may exceed 50% of its outstanding equity interests, the entity is not consolidated as the Company is not the primary beneficiary. Webster has determined that it is not the primary beneficiary due to its inability to direct the activities that most significantly impact economic performance and the Company does not have the obligation to absorb losses and/or right to receive benefits. Webster applies the proportional amortization method to subsequently measure its investments in qualified affordable housing projects.
At December 31, 2021 and 2020, the aggregate carrying value of Webster's tax credit finance investments was $43.4 million and $37.2 million, respectively, which is included in accrued interest receivable and other assets on the accompanying Consolidated Balance Sheets, and represents the Company's maximum exposure to loss. At December 31, 2021 and 2020, unfunded commitments of $11.1 million and $10.2 million were recognized, respectively, and are included in accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. During the years ended December 31, 2021 and 2019, Webster approved additional commitments of $10.1 million and $17.2 million, respectively, to fund tax credit finance investments. There were no such commitments approved during the year ended December 31, 2020.
Webster Statutory Trust. Webster owns all the outstanding common stock of Webster Statutory Trust, a financial vehicle that has issued, and in the future may issue, trust preferred securities. The Company is not the primary beneficiary of Webster Statutory Trust. Webster Statutory Trust's only assets are junior subordinated debentures that issued are issued by the Company, which were acquired using the proceeds from the issuance of trust preferred securities and common stock. The junior subordinated debentures are included in long-term debt on the accompanying Consolidated Balance Sheets, and the related interest expense is reported as interest expense on long-term debt on the accompanying Consolidated Statements of Income. Additional information regarding these junior subordinated debentures can be found within Note 12: Borrowings.
Other Non-Marketable Investments. Webster invests in alternative investments comprising interests in non-public entities that cannot be redeemed since the investment is distributed as the underlying equity is liquidated. The ultimate timing and amount of these distributions cannot be predicted with reasonable certainty. For each of these alternative investments that is classified as a variable interest entity, the Company has determined that it is not the primary beneficiary due to its inability to direct the activities that most significantly impact economic performance. At December 31, 2021 and 2020, the aggregate carrying value of Webster's other non-marketable investments was $61.5 million and $34.3 million, respectively, and its maximum exposure to loss, including unfunded commitments, was $95.9 million and $72.7 million, respectively. Information regarding the fair value other non-marketable investments can be found within Note 18: Fair Value Measurements.
Webster's equity interests in Other Non-Marketable Investments, as well as in Tax Credit-Finance Investments and Webster Statutory Trust, are included in accrued interest receivable and other assets on the accompanying Consolidated Balance Sheets. Information regarding the Company's accounting policy for its consolidation of variable interest entities can be found under the section captioned "Principles of Consolidation" within Note 1: Summary of Significant Accounting Policies