Tax Credit Investments

6 Months Ended

Jun. 30, 2020

Note 9: Tax Credit Investments

The Company invests in qualified affordable housing projects and federal historic projects for the purpose of community reinvestment and obtaining tax credits. The Company’s tax credit investments are limited to existing lending relationships with well-known developers and projects within the Company’s market area.

The following table presents the Company’s investments in qualified affordable housing projects and other tax credit investments at June 30, 2020 and December 31, 2019:


		June 30, 2020				December 31, 2019
Investment	Accounting Method		Investment		Unfunded Commitment ⁽¹⁾		Investment		Unfunded Commitment
Low Income Housing Tax Credit (LIHTC)	Proportional Amortization	$	2,007	$	—	$	2,148	$	—
Federal Historic Tax Credit (FHTC)	Equity		2,490		3,405		2,262		3,395
Total		$	4,497	$	3,405	$	4,410	$	3,395

(1)

All commitments are expected to be paid by the Company by June 30, 2021.

The following table presents the amortization expense and tax benefit recognized for the Company’s qualified affordable housing projects and other tax credit investments for the three and six months ended June 30, 2020 and 2019:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Amortization Expense⁽¹⁾
LIHTC	$	70	$	72	$	141	$	144
FHTC		362		1,390		447		1,567
Total	$	432	$	1,462	$	588	$	1,711
Tax Benefit Recognized⁽²⁾
LIHTC	$	(82)	$	(83)	$	(165)	$	(165)
FHTC		(447)		(1,684)		(617)		(1,898)
Total	$	(529)	$	(1,767)	$	(782)	$	(2,063)

(1)

The amortization expense for the LIHTC investments are included in income tax expense. The amortization for the FHTC tax credits are included in noninterest expense.

(2)

All of the tax benefits recognized are included in income tax expense. The tax benefit recognized for the FHTC investments primarily reflects the tax credits generated from the investments, and excludes the net tax expense/benefit of the investments’ income/loss.