Variable Interest Entities

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

For additional information on our accounting policy and our use of variable interest entities (VIEs), refer to pages 165 to 166 in Note 14 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, "Variable Interest Entities", in our 2023 Form 10-K.

Interests in Investment Funds

As of both March 31, 2024 and December 31, 2023, we had no consolidated funds. As of both March 31, 2024 and December 31, 2023, we managed certain funds, considered VIEs, in which we held a variable interest, but for which we were not deemed to be the primary beneficiary. Our potential maximum loss exposure related to these

unconsolidated funds totaled $18 million as of both March 31, 2024 and December 31, 2023, and represented the carrying value of our investments, which are recorded in other assets in our consolidated statement of condition. The amount of loss we may recognize during any period is limited to the carrying amount of our investments in the unconsolidated funds.

We also held investments in low-income housing, production and investment tax credit entities, considered VIEs for which we were not deemed to be the primary beneficiary. As of March 31, 2024 and December 31, 2023, our potential maximum loss exposure related to these unconsolidated entities totaled $1.28 billion and $1.33 billion, respectively, most of which represented the carrying value of our investments which are recorded in other assets in our consolidated statement of condition.

We account for our low-income housing tax credit investments (LIHTC) under the proportional amortization method. Effective January 1, 2023, we also elected to account for our investments in production tax credit investments under the proportional amortization method of accounting. Under the proportional amortization method, the initial cost of the investment is amortized based on a percentage of the actual income tax credits and other income tax benefits allocated in the current period versus the total estimated income tax credits and other income tax benefits expected to be received over the life of the investment. The net benefit, representing the difference between amortization of the investment balance, recognition of the income tax credits and recognition of other income tax benefits from the investment is recognized as a component of income tax expense.

As of March 31, 2024, we had investments in LIHTC and production tax credit investments of $788 million and $365 million, respectively, which are included in other assets in our consolidated statement of condition. Contingent contributions related to the renewable energy production tax credit investments were $48 million at March 31, 2024. These contributions are contingent on production and expected to be paid through 2033. Deferred contributions related to the LIHTC investments were $149 million at March 31, 2024. These deferred contributions are payable in accordance with the respective agreements and are expected to be paid through 2038.

The following table presents the impact of our tax credit programs for which we have elected to apply proportional amortization accounting on our consolidated statement of income for the periods indicated:


(In millions)	Three Months Ended March 31, 2024





Income (loss) recorded on investments within other fee revenue	$	4
Income recorded in total revenue	4

Tax credits and benefits recognized in income tax expense	56
Proportional amortization recognized in income tax expense	(44)
Net benefits included in income tax expense	12
Net benefit attributable to tax-advantaged investments included in the consolidated statement of income	$	16