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

$3.5

million at

December 31, 2017.

These investments are recorded in

Other Assets

with a corresponding funding obligation of

$361

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

6%.

over the life of the investment. 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, 2017

and

December 31, 2016.

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, 2017

and

2016.

	At December 31, 2017						For the year ended December 31, 2017
	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		Investments		Benefit
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,182	$	20	$	224	$	179	$	45
WNC Institutional Tax Credit Fund 38, L.P.		1,000		589		—		139		108		31
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,476		341		271		237		34
California Affordable Housing Fund		2,454		282		—		176		164		12
Total	$	7,954	$	3,529	$	361	$	810	$	688	$	122

	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		Investments		Benefit
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,361	$	45	$	237	$	192	$	45
WNC Institutional Tax Credit Fund 38, L.P.		1,000		698		73		143		100		43
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,713		367		266		106		160
California Affordable Housing Fund		2,454		445		—		205		200		5
Total	$	7,954	$	4,217	$	485	$	851	$	598	$	253

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

December 31, 2017,

2016

and

2015.

	For the Years Ended December 31,
	2017				2016				2015
(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	$	176	$	48	$	184	$	53	$	168	$	62
WNC Institutional Tax Credit Fund 38, L.P.		113		26		107		36		93		27
Merritt Community Capital Corporation Fund XV, L.P.		215		56		206		60		214		58
California Affordable Housing Fund		126		50		158		47		158		43
Total	$	630	$	180	$	655	$	196		633	$	190

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

$688

thousand,

$598

thousand and

$712

thousand for the years ended

December 31, 2017,

2016

and

2015,

respectively.

The following table reflects the anticipated net income tax benefit at

December 31, 2017,

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

and has been updated to reflect the change in tax rate in the Tax Cuts and Jobs Act enacted on

December 22, 2017.

(Amounts in thousands)	Raymond James				Merritt Community		California
Qualified Affordable Housing Partnerships:	California Housing		WNC Institutional		Capital		Affordable			Total
Anticipated income tax benefit, net less	Opportunities		Tax Credit		Corporation		Housing			Income Tax
amortization of investments	Fund II		Fund 38, L.P.		Fund XV, L.P		Fund			Benefit, Net
2018	$	23	$	21	$	3	$	(17	)	$	30
2019		23		17		4		(14	)		30
2020		22		17		4		(14	)		29
2021		23		16		3		(14	)		28
2022 and thereafter		61		42		9		(43	)		69
Total	$	152	$	113	$	23	$	(102	)	$	186