Variable Interest Entities

6 Months Ended

Jun. 30, 2021

In the normal course of business, the Company has certain financial interests in entities which have been determined to be VIEs. Generally, a VIE is a corporation, partnership, trust or other legal structure where the equity investors do not have substantive voting rights, an obligation to absorb the entity’s losses or the right to receive the entity’s returns, or the ability to direct the significant activities of the entity. The following discusses the Company’s consolidated and unconsolidated VIEs.

Consolidated VIEs

The following tables present the assets and liabilities of consolidated VIEs recorded on the Company’s consolidated balance sheets at June 30, 2021 and December 31, 2020.


	June 30, 2021
	Consolidated Assets						Consolidated Liabilities
(Dollars in millions)	Loans Held for Investment, Net		Other Assets		Total Assets		Other Liabilities		Total Liabilities
LIHC investments	$	—	$	74	$	74	$	14	$	14
Leasing investments	281		109		390		2		2
Total consolidated VIEs	$	281	$	183	$	464	$	16	$	16


	December 31, 2020
	Consolidated Assets						Consolidated Liabilities
(Dollars in millions)	Loans Held for Investment, Net		Other Assets		Total Assets		Other Liabilities		Total Liabilities
LIHC investments	$	—	$	81	$	81	$	16	$	16
Leasing investments	310		111		421		5		5
Total consolidated VIEs	$	310	$	192	$	502	$	21	$	21

LIHC Investments

The Company sponsors, manages and syndicates two LIHC investment fund structures. These investments are designed to generate a return primarily through the realization of U.S. federal tax credits and deductions. The Company is considered the primary beneficiary and has consolidated these investments because the Company has the power to direct activities that most significantly impact the funds’ economic performances and also has the obligation to absorb losses of the funds that could potentially be significant to the funds. Neither creditors nor equity investors in the LIHC investments have any recourse to the general credit of the Company, and the Company’s creditors do not have any recourse to the assets of the consolidated LIHC investments.

Leasing Investments

The Company has leasing investments primarily in the wind energy and rail industries. The Company is considered the primary beneficiary and has consolidated these investments because the Company has the power to direct the activities of these entities that significantly impact the entities’ economic performances. The Company also has the right to receive potentially significant benefits or the obligation to absorb potentially significant losses of these investments.

Unconsolidated VIEs

The following tables present the Company’s carrying amounts related to the unconsolidated VIEs at June 30, 2021 and December 31, 2020. The tables also present the Company’s maximum exposure to loss resulting from its involvement with these VIEs. The maximum exposure to loss represents the carrying amount of the Company’s involvement plus any legally binding unfunded commitments in the unlikely event that all of the assets in the VIEs become worthless. During the six months ended June 30, 2021 and June 30, 2020, noncash increases in unfunded commitments on LIHC investments were de minimis and $52 million, respectively, included in other liabilities.


	June 30, 2021
	Unconsolidated Assets								Unconsolidated Liabilities
(Dollars in millions)	Securities Available for Sale		Loans Held for Investment, Net		Other Assets		Total Assets		Other Liabilities		Total Liabilities		Maximum Exposure to Loss
LIHC investments	$	26	$	261	$	765	$	1,052	$	155	$	155	$	1,052
Renewable energy investments	—		18		1,112		1,130		—		—		1,150
Other investments	—		—		110		110		4		4		208
Total unconsolidated VIEs	$	26	$	279	$	1,987	$	2,292	$	159	$	159	$	2,410


	December 31, 2020
	Unconsolidated Assets									Unconsolidated Liabilities
(Dollars in millions)		Securities Available for Sale		Loans Held for Investment, Net		Other Assets		Total Assets		Other Liabilities		Total Liabilities		Maximum Exposure to Loss
LIHC investments		$	26	$	256	$	831	$	1,113	$	209	$	209	$	1,113
Renewable energy investments		—		—		1,215		1,215		—		—		1,235
Other investments		—		—		88		88		4		4		187
Total unconsolidated VIEs		$	26	$	256	$	2,134	$	2,416	$	213	$	213	$	2,535

LIHC Investments

The Company makes investments in partnerships and funds formed by third parties. The primary purpose of the partnerships and funds is to invest in low-income housing units and distribute tax credits and tax benefits associated with the underlying properties to investors. The Company is a limited partner investor and is allocated tax credits and deductions, but has no voting or other rights to direct the activities of the funds or partnerships, and therefore is not considered the primary beneficiary and does not consolidate these investments.

The following table presents the impact of the unconsolidated LIHC investments on our consolidated statements of income for the three and six months ended June 30, 2021 and 2020.


	For the Three Months Ended				For the Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
(Dollars in millions)
Losses from LIHC investments included in other noninterest expense	$	1	$	1	$	2	$	2
Amortization of LIHC investments included in income tax expense	31		28		63		59
Tax credits and other tax benefits from LIHC investments included in income tax expense	40		43		82		79

Renewable Energy Investments

Through its subsidiaries, the Company makes equity investments in LLCs established by third party sponsors to operate and manage wind, solar, hydroelectric and cogeneration power plant projects. Power generated by the projects is sold to third parties through long-term purchase power agreements. As a limited investor member, the Company is allocated production tax credits and taxable income or losses associated with the projects. The Company has no voting or other rights to direct the significant activities of the LLCs, and therefore is not considered the primary beneficiary and does not consolidate these investments.

Other Investments

The Company has other investments in structures formed by third parties. The Company has no voting or other rights to direct the activities of the investments that would most significantly impact the entities’ performance, and therefore is not considered the primary beneficiary and does not consolidate these investments.