Variable Interest Entities (VIEs)

12 Months Ended

Dec. 31, 2024

Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract]

VARIABLE INTEREST ENTITIES (VIEs)

The Corporation evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and whether the Corporation is the primary beneficiary and should consolidate the entity based on the variable interests it held both at inception and when there is a change in circumstances that requires a reconsideration.

The Corporation holds ownership interests in funds in the form of limited partnerships or limited liability companies (LLCs) investing in affordable housing projects that qualify for the low-income housing tax credit (LIHTC). The Corporation also directly invests in limited partnerships and LLCs which invest in community development projects, which generate similar tax credits to investors (other tax credit entities). As an investor, the Corporation obtains income tax credits and deductions from the operating losses of these tax credit entities. These tax credit entities meet the definition of a VIE; however, the Corporation is not the primary beneficiary of the entities, as the general partner or the managing member has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities.

The Corporation accounts for its interests in LIHTC entities and, upon adoption of ASU 2023-02 as discussed in Note 1, other tax credit entities that meet certain criteria using the proportional amortization method. Ownership interests in tax credit entities that do not qualify for the proportional amortization method are accounted for under either the cost or equity method. Exposure to loss as a result of the Corporation’s involvement in entities using the proportional amortization method was limited to $566 million and none for other tax credit entities at December 31, 2024.

Investment balances, including all legally binding commitments to fund future investments that are accounted for using the proportional amortization method, are included in accrued income and other assets on the Consolidated Balance Sheets. A liability is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets for all legally binding unfunded commitments to fund tax credit entities that are accounted for using the proportional amortization method ($238 million at December 31, 2024). Amortization and other write-downs of tax credit investments for which the proportional amortization method is applied are presented on a net basis as a component of the provision for income taxes on the Consolidated Statements of Income, while amortization and write-downs of other tax credit investments are recorded in other noninterest income. The income tax credits and deductions are recorded as a reduction of income tax expense and a reduction of federal income taxes payable. The cash flows related to the total income tax benefits are presented in the "net income," "benefit for deferred income taxes" and "other, net" line items within the operating activities section of the Consolidated Statements of Cash Flows.

The Corporation provided no financial or other support that was not contractually required to any of the above VIEs during the years ended December 31, 2024, 2023 and 2022.

The following table summarizes the impact of these tax credit entities on the Corporation’s Consolidated Statements of Income.



(in millions)
Years Ended December 31	2024


Provision for income taxes:
Amortization of investments	$	76
Tax credits	(75)
Other income tax benefits related to tax credit entities	(16)
Total provision for income taxes	$	(15)

Prior to the adoption of ASU 2023-02, only LIHTC investments qualified for the proportional amortization method of accounting. The following table summarizes the impact of these LIHTC entities on the Corporation’s Consolidated Statements of Comprehensive Income.


(in millions)
Years Ended December 31	2023		2022
Other noninterest income:
Amortization of other tax credit investments	$	(4)	$	—
Provision for income taxes:
Amortization of LIHTC investments	69		72
Low income housing tax credits	(65)		(68)
Other tax benefits related to tax credit entities	(21)		(18)
Total provision for income taxes	$	(17)	$	(14)

For further information on the Corporation’s consolidation policy, see Note 1.