Tax Credit Investments

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Tax Credit Investments

Tax Credit Investments

TCIs are primarily for investments promoting qualified affordable housing projects and investments in community development entities. Investments in these projects generate a return primarily through the realization of federal income tax credits and deductions for operating losses over a specified time period.

The TCIs are included in other assets, with any unfunded equity commitments recorded in other liabilities on the consolidated balance sheets. Certain TCIs qualify for the proportional amortization method and are amortized over the period the Corporation expects to receive the tax credits, with the expense included within income taxes on the consolidated statements of income. Other TCIs are accounted for under the equity method of accounting, with amortization included within non-interest expense on the consolidated statements of income. This amortization includes equity in partnership losses and the systematic write-down of investments over the period in which income tax credits are earned. All of the TCIs are evaluated for impairment at the end of each reporting period.

The following table presents the balances of the Corporation's TCIs and related unfunded commitments:

		September 30,		December 31,
		2020		2019
Included in other assets:		(in thousands)
Affordable housing tax credit investment, net		$	145,415	$	153,351
Other tax credit investments, net		70,379		64,354
	Total TCIs, net	$	215,794	$	217,705
Included in other liabilities:
Unfunded affordable housing tax credit commitments		$	22,591	$	16,684
Other tax credit liabilities		60,585		55,105
	Total unfunded tax credit commitments and liabilities	$	83,176	$	71,789

The following table presents other information relating to the Corporation's TCIs:

		Three Months Ended				Nine Months Ended
		September 30				September 30
		2020		2019		2020		2019
Components of income taxes:		(in thousands)
Affordable housing tax credits and other tax benefits		$	(7,290)	$	(7,852)	$	(21,678)	$	(23,002)
Other tax credit investment credits and tax benefits		(1,240)		(1,136)		(3,122)		(3,407)
Amortization of affordable housing investments, net of tax benefit		5,024		5,649		15,071		16,638
Deferred tax expense		275		238		691		715
	Total net reduction in income tax expense	$	(3,231)	$	(3,101)	$	(9,038)	$	(9,056)
Amortization of TCIs:
Affordable housing tax credits investment		$	1,021	$	863	$	3,065	$	2,508
Other tax credit investment amortization		673		670		1,529		2,008
	Total amortization of TCIs	$	1,694	$	1,533	$	4,594	$	4,516