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Note 24 - Qualified Affordable Housing Project Investments

12 Months Ended

Dec. 31, 2015

Qualified Affordable Housing Project Investments [Abstract]

Qualified Affordable Housing Project Investments [Text Block]

NOTE 24. QUALIFIED AFFORDABLE HOUSING PARTNERSHIP INVESTMENTS

Our investment in Qualified Affordable Housing Partnerships that generate Low Income Housing Tax Credits (“LIHTC”) at December 31, 2015 was $4.8 million. These investments are recorded in other assets with a corresponding funding obligation of $1.2 million recorded in other liabilities. We have invested in four separate LIHTC partnerships which provide the Company with CRA credit. Additionally, the investments in LIHTC partnerships provide us with tax credits and with operating loss tax benefits over an approximately 18 year period. None of the original investments will be repaid. The tax credits and the operating loss tax benefits that are generated by each of the properties are expected to exceed the total value of the investments we made and provide returns on the investments of between 4% and 7%. The investments in LIHTC partnerships are being accounted for using the proportional amortization method, under which we amortize the initial cost of an investment in proportion to the amount of the tax credits and other tax benefits received, and recognize the net investment performance in the Consolidated Statements of Operations as a component of income tax expense.

The following table presents our original investment in LIHTC partnerships, the current recorded investment balance, and the unfunded liability balance of each investment at December 31, 2015 and December 31, 2014. In addition, the table reflects the tax credits and tax benefits, amortization of the investment and the net impact to our income tax provision for the years ended December 31, 2015 and 2014.

(Amounts in thousands)	Original		Current		Unfunded		Tax Credits		Amortization		Net
Qualified Affordable Housing Partnerships at	Investment		Recorded		Liability		and		of		Income Tax
December 31, 2015	Value		Investment		Obligation		Benefits ⁽¹⁾		Investments ⁽²⁾		Benefit
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,553	$	406	$	226	$	184	$	42
WNC Institutional Tax Credit Fund 38, L.P.		1,000		797		166		126		93		33
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,820		610		278		230		48
California Affordable Housing Fund		2,454		645		—		207		207		—
Total – investments in qualified affordable housing partnerships	$	7,954	$	4,815	$	1,182	$	837	$	714	$	123

(Amounts in thousands)	Original		Current		Unfunded		Tax Credits		Amortization		Net
Qualified Affordable Housing Partnerships at	Investment		Recorded		Liability		and		of		Income Tax
December 31, 2014	Value		Investment		Obligation		Benefits ⁽¹⁾		Investments ⁽²⁾		Benefit
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,846	$	736	$	160	$	154	$	31
WNC Institutional Tax Credit Fund 38, L.P.		1,000		888		314		105		112		26
Merritt Community Capital Corporation Fund XV, L.P.		2,500		2,050		1,374		340		450		58
California Affordable Housing Fund		2,454		852		—		209		187		22
Total – investments in qualified affordable housing partnerships	$	7,954	$	5,636	$	2,424	$	814	$	903	$	137

(1) The amounts reflected in this column represent both the tax credits, as well as the tax benefits generated by the Qualified Affordable Housing partnerships operating loss for the year.

(2)This amount reduces the tax credits and benefits generated by the Qualified Affordable Housing partnerships.

The following table presents our generated tax credits and tax benefits from investments in qualified affordable housing projects for the years ended December 31, 2015 and 2014.

	For the Years Ended December 31,
	2015				2014				2013
(Amounts in thousands)	Generated		Tax Benefits from		Generated		Tax Benefits from		Generated		Tax Benefits from
Qualified Affordable Housing Partnerships	Tax Credits		Taxable Losses		Tax Credits		Taxable Losses		Tax Credits		Taxable Losses
Raymond James California Housing Opportunities Fund II	$	173	$	53	$	115	$	45	$	25	$	5
WNC Institutional Tax Credit Fund 38, L.P.		99		27		84		21		40		6
Merritt Community Capital Corporation Fund XV, L.P.		218		60		265		75		161		42
California Affordable Housing Fund		158		49		158		51		—		—
Total	$	648	$	189	$	622	$	192		226	$	53

The tax credits and benefits were partially offset by the amortization of the principal investment balances of $714 thousand, $903 thousand and $452 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

The following table reflects the anticipated net income tax benefit at December 31, 2015, that we expect to recognize over the remaining life of the investments.

	Raymond James		WNC Institutional		Merritt Community		California		Total Net
(Amounts in thousands)	California Housing		Tax Credit		Capital Corporation		Affordable Housing		Income Tax
Qualified Affordable Housing Partnerships	Opportunities Fund II		Fund 38, L.P.		Fund XV, L.P		Fund		Benefit
Anticipated net income tax benefit less amortization of investments:
2016	$	46	$	35	$	47	$	1	$	129
2017		46		35		45		—		126
2018		45		35		45		—		125
2019		45		30		44		—		119
2020 and thereafter		218		128		194		1		541
Total	$	400	$	263	$	375	$	2	$	1,040