NOTE

. QUALIFIED AFFORDABLE HOUSING

PARTNERSHIP

INVESTMENTS

Our investments in Qualified Affordable Housing Partnerships that generate Low Income Housing Tax Credits (“LIHTC”) and deductible operating losses totaled

$4.2

million at

December

31,

2016.

These investments are recorded in other assets with a corresponding funding obligation of

$485

thousand recorded in

Other Liabilities

in our

Consolidated Balance Sheets

. 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

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

and

8%.

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 Income

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,

2016

and

December

31,

2015.

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,

2016

and

2015.

			At December 31, 2016				For the year ended December 31, 2016
	Original		Current		Unfunded		Tax Credits		Amortization		Net
(Amounts in thousands)	Investment		Recorded		Liability		and		of		Income Tax
Qualified Affordable Housing Partnerships	Value		Investment		Obligation		Benefits (1)		Investments (2)		Benefit
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,361	$	45	$	227	$	192	$	35
WNC Institutional Tax Credit Fund 38, L.P.		1,000		698		73		140		100		40
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,713		367		274		106		168
California Affordable Housing Fund		2,454		445		—		202		200		2
Total	$	7,954	$	4,217	$	485	$	843	$	598	$	245

			At December 31, 2015				For the year ended December 31, 2015
	Original		Current		Unfunded		Tax Credits		Amortization		Net
(Amounts in thousands)	Investment		Recorded		Liability		and		of		Income Tax
Qualified Affordable Housing Partnerships	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	$	7,954	$	4,815	$	1,182	$	837	$	714	$	123

The following table presents our generated tax credits and tax benefits from investments in qualified affordable housing partnerships for the years ended

December

31,

2016

and

2015

and

2014.

	For the Years Ended December 31,
	2016				2015				2014
(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	$	178	$	49	$	173	$	53	$	115	$	45
WNC Institutional Tax Credit Fund 38, L.P.		112		28		99		27		84		21
Merritt Community Capital Corporation Fund XV, L.P.		217		57		218		60		265		75
California Affordable Housing Fund		158		44		158		49		158		51
Total	$	665	$	178	$	648	$	189		622	$	192

The tax credits and benefits were partially offset by the amortization of the principal investment balances of

$598

thousand,

$714

thousand and

$903

thousand for the years ended

December

31,

2016,

2015

and

2014,

respectively.

The following table reflects the anticipated net income tax benefit at

December

31,

2016,

that is expected to be recognized over the remaining life of the investments.

(Amounts in thousands)	Raymond James California Housing Opportunities		WNC Institutional Tax Credit		Merritt Community Capital Corporation		California Affordable Housing			Total Net Income Tax
Qualified Affordable Housing Partnerships	Fund II		Fund 38, L.P.		Fund XV, L.P		Fund			Benefit
Anticipated net income tax benefit less amortization of investments:
2017	$	46	$	35	$	48	$	(2	)	$	127
2018		45		35		46		(1	)		125
2019		45		30		45		—			120
2020		45		29		45		—			119
2021 and thereafter		170		102		183		(2	)		453
Total	$	351	$	231	$	367	$	(5	)	$	944