Tax Equity Investments

6 Months Ended

Jun. 30, 2024

Note 14 – Tax Equity Investments

The Company makes investments in the equity of certain limited partnerships or limited liability companies that typically qualify for credit under the Community Reinvestment Act. Certain of these equity investments are associated with affordable housing projects that generate LIHTC and other income tax benefits for the Company.

The Company typically accounts for tax equity investments using the proportional amortization method, if certain criteria are met. The election to account for tax equity investments using the proportional amortization method is done so on a tax credit program-by-tax credit program basis. Under the proportional amortization method, the Company amortizes the initial cost of the investment, which is inclusive of any commitments to make future equity contributions, in proportion to the income tax credits and other income tax benefits that are allocated to the Company over the period of the investment. The net benefits of these investments, which are comprised of income tax credits and operating loss income tax benefits, net of investment amortization, are recognized in the income statement as a component of income tax expense. At June 30, 2024 and December 31, 2023, the carrying value of these investments was $81.9 million and $88.8 million, respectively, and are included in other assets in the consolidated statements of financial position.

As of June 30, 2024, the Company’s unfunded commitments associated with tax equity investments, which comprise of investments in affordable housing partnerships, were estimated to be paid as follows:


(Dollars in thousands)	Amount
Year Ending December 31,
2024	$	6,022
2025	12,053
2026	8,516
2027	786
2028	463
Thereafter	2,498
Total unfunded commitments	$	30,338

The following table presents income tax credits and other income tax benefits, as well as amortization expense, associated with investments in qualified affordable housing partnerships where the proportional amortization method of accounting has been applied for the periods indicated.


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands)	2024		2023		2024		2023
Tax credit and other tax benefits recognized (1)	$	4,217	$	3,781	$	8,434	$	7,557
Amortization of investments (1)	3,475		3,054		$	6,950	$	6,104

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(1) Amounts for income tax credits and other income tax benefits, as well as amortization of investments, are included in income tax expense in the consolidated statements of income, and net change in accrued interest receivable and other assets on the consolidated statements of cash flows, for the periods presented above.

During the three and six months ended June 30, 2024, non-income-tax-related income of $371,000 associated with a tax equity investment was included in other income in the consolidated statements of income as well as net change in accrued interest receivable and other assets on the consolidated statements of cash flows. There was no non-income-tax-related activity associated with tax equity investments recorded outside of income tax expense for the three and six months ended June 30, 2023. There were no impairment losses recorded on tax equity investments during the three and six months ended June 30, 2024 and 2023.