Low Income Housing Tax Credits and Other Tax Credit Investments

3 Months Ended

Mar. 31, 2022

Investments in Affordable Housing Projects [Abstract]

Low Income Housing Tax Credits and Other Tax Credit Investments

The Community Reinvestment Act (“CRA”) encourages banks to meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate income. The Company has primarily invested in separate Low Income Housing Tax Credits (“LIHTC”) projects, also referred to as qualified affordable housing projects, which provide the Company with tax credits and operating loss tax benefits over a period of approximately 15 years. The return on these investments is generally generated through tax credits and tax losses. In addition to LIHTC projects, the Company invests in new markets tax credit projects that qualify for CRA credits and eligible projects that qualify for renewable energy and historic tax credits.

As of March 31, 2022 and December 31, 2021, the Company had $82.5 million and $83.8 million, respectively, in tax credit investments that were included in other assets in the consolidated balance sheets.

When permissible, the Company accounts for its investments in LIHTC projects using the proportional amortization method, under which it amortizes the initial cost of the investment in proportion to the amount of the tax credits and other tax benefits received and recognizes that amortization as a component of income tax expense. The net investment in the housing projects is included in other assets. The Company will continue to use the proportional amortization method on any new qualifying LIHTC investments.

The following table presents the Company’s investments in LIHTC projects accounted for using the proportional amortization method for the periods indicated:


	As of March 31, 2022		As of December 31, 2021
	(In thousands)
Current recorded investment included in other assets	$	79,722	$	81,035
Commitments to fund qualified affordable housing projects included in recorded investment noted above	43,287		48,399

The following table presents additional information related to the Company's investments in LIHTC projects for the periods indicated:


	For the Three Months Ended March 31,
	2022		2021
	(In thousands)
Tax credits and benefits recognized	$	2,321	$	1,464
Amortization expense included in income tax expense	1,843		1,264

The Company accounts for certain other investments in renewable energy projects using the equity method of accounting. These investments in renewable energy projects are included in other assets on the consolidated balance sheet and totaled $2.8 million as of both March 31, 2022 and December 31, 2021. There were no outstanding commitments related to these investments as of both March 31, 2022 and December 31, 2021.