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Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities | 12 Months Ended
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Dec. 31, 2021
Investments in Qualified Affordable Housing Partnerships, Net [Abstract] |
Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities | Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities The CRA encourages banks to meet the credit needs of their communities, particularly including low- and moderate-income individuals and neighborhoods. The Company invests in certain affordable housing projects in the form of ownership interests in limited partnerships or limited liability companies that qualify for CRA and tax credits. These entities are formed to develop and operate apartment complexes designed as high-quality affordable housing for lower income tenants throughout the U.S. To fully utilize the available tax credits, each of these entities must meet the regulatory affordable housing requirements for a minimum 15-year compliance period. In addition to affordable housing projects, the Company also invests in New Market Tax Credit projects that qualify for CRA credits, as well as projects that qualify for renewable energy and historic tax credits. New Market Tax Credit investments provide capital through Community Development Entities to promote community development and economic growth. Investments in renewable energy tax credits help to promote the development of renewable energy sources, and the investments in historic tax credits promote the rehabilitation of historic buildings and economic revitalization of the surrounding areas. Investments in Qualified Affordable Housing Partnerships, Net The Company records its investments in qualified affordable housing partnerships using the proportional amortization method if the investments meet certain criteria. Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the amortization in Income tax expense on the Consolidated Statement of Income. The following table presents the Company’s investments in qualified affordable housing partnerships, net, and related unfunded commitments as of December 31, 2021 and 2020:
($ in thousands) |  | December 31,
| 2021 |  | 2020
Investments in qualified affordable housing partnerships, net |  | $ | 289,741 |  |  | $ | 213,555 |
Accrued expenses and other liabilities — Unfunded commitments |  | $ | 146,152 |  |  | $ | 77,444 |
The following table presents additional information related to the Company’s investments in qualified affordable housing partnerships, net, for the years ended December 31, 2021, 2020 and 2019:
($ in thousands) |  | Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Tax credits and other tax benefits recognized |  | $ | 50,591 |  |  | $ | 45,971 |  |  | $ | 46,034 |
Amortization expense included in income tax expense |  | $ | 33,248 |  |  | $ | 37,132 |  |  | $ | 36,561 |
Investments in Tax Credit and Other Investments, Net Depending on the ownership percentage and the influence the Company has on the investments in tax credit and other investments, the Company applies the equity or cost method of accounting, or the measurement alternative as elected under ASU 2016-01 for equity investments without readily determinable fair value. The following table presents the Company’s investments in tax credit and other investments, net, and related unfunded commitments as of December 31, 2021 and 2020:
($ in thousands) |  | December 31,
| 2021 |  | 2020
Investments in tax credit and other investments, net |  | $ | 338,522 |  |  | $ | 266,525 |
Accrued expenses and other liabilities — Unfunded commitments |  | $ | 163,464 |  |  | $ | 105,282 |
The following table presents additional information related to the Company’s investments in tax credit and other investments, net, for the years ended December 31, 2021, 2020 and 2019:
($ in thousands) |  | Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Amortization of tax credit and other investments |  | $ | 122,457 |  |  | $ | 70,082 |  |  | $ | 98,383 |
The Company held equity securities that are mutual funds with readily determinable fair values of $26.6 million and $31.3 million, as of December 31, 2021 and 2020, respectively. The Company invested in these mutual funds for CRA purposes. These equity securities were measured at fair value with changes in fair value recorded in net income. The Company recorded unrealized losses on these equity securities of $746 thousand for the year ended December 31, 2021, compared with unrealized gains of $732 thousand for the year ended December 31, 2020. Equity securities with readily determinable fair value were included in Investments in tax credit and other investments, net on the Consolidated Balance Sheet. The Company held equity securities without readily determinable fair values totaling $33.1 million and $23.7 million as of December 31, 2021 and 2020, respectively, which were measured using the measurement alternative at cost less impairment and adjusted for observable price changes. For the year ended December 31, 2021, the Company recorded no OTTI charges, compared with $360 thousand OTTI charges recorded for the year ended December 31, 2020 related to these securities. Equity securities without readily determinable fair values were included in Investments in tax credit and other investments, net and Other Assets on the Consolidated Balance Sheet. As of December 31, 2021, the Company’s unfunded commitments related to investments in qualified affordable housing partnerships, tax credit and other investments are estimated to be funded as follows:
($ in thousands) |  | Amount
2022 |  | $ | 174,475 |
2023 |  | 109,622 |
2024 |  | 5,751 |
2025 |  | 14,847 |
2026 |  | 978 |
Thereafter |  | 3,943 |
Total |  | $ | 309,616 |
Tax credit and other investments are evaluated for possible OTTI on an annual basis or when events or changes in circumstances suggest that the carrying amount of the tax credit investments may not be realizable. OTTI charges and impairment recoveries are recorded within Amortization of tax credit and other investments on the Consolidated Statement of Income. Refer to Note 2 — Fair Value Measurement and Fair Value of Financial Instruments to the Consolidated Financial Statements in this Form 10-K for a discussion on the Company’s impairment evaluation and monitoring process of tax credit investments. During the year ended December 31, 2021, there were no OTTI charges and $1.3 million OTTI recoveries were recorded related to the Company’s investments in tax credits and other investments, net. Comparatively, there were $4.8 million in OTTI charges, offset by OTTI recoveries of $1.5 million, during the year ended December 31, 2020; and $14.6 million in OTTI charges, offset by $1.6 million in recoveries recorded during the year ended December 31, 2019. Variable Interest Entities The Company invests in unconsolidated limited partnerships and similar entities that construct, own and operate affordable housing, historic rehabilitation, wind and solar projects, of which the majority of such investments are VIEs. As a limited partner in these partnerships, these investments are designed to generate a return primarily through the realization of federal tax credits and tax benefits. An unrelated third party is typically the general partner or managing member who has control over the significant activities of such investments. While the Company’s interest in some of the investments may exceed 50% of the outstanding equity interests, the Company does not consolidate these structures due to the general partner or managing member’s ability to manage the entity, which is indicative of power over them. The Company’s expected maximum exposure to loss in connection with these partnerships consist of the unamortized investment balance and any tax credits claimed that may be subject to recapture. Special purpose entities formed in connection with securitization transactions are generally considered VIEs. A CLO is a VIE that manages a pool of assets consisting primarily of broadly syndicated corporate loans, where multiple tranches of notes are issued to investors. The Company served as the collateral manager of a CLO that closed in 2019 and subsequently sold its portfolio management contract in 2020 but retained the top three investment grade-rated tranches, which had a carrying amount of $291.7 million and $287.5 million as of December 31, 2021 and 2020, respectively.

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- Definition The entire disclosure for affordable housing partnerships, tax credit, other investments, net and variable interest entities. + References No definition available. + Details
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