NOTE

QUALIFIED AFFORDABLE HOUSING PARTNERSHIP INVESTMENTS

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. 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

over the life of the investment.

None

of the original investments will be repaid.

Our investments in Qualified Affordable Housing Partnerships totaled

$2.8

million at

June 30, 2019.

These investments are recorded in

Other Assets

with a corresponding funding obligation of

$343

thousand recorded in

Other Liabilities

in our

Consolidated Balance Sheets

. 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 tables present our original investment in LIHTC partnerships, the current recorded investment balance, and the unfunded liability balance of each investment at

June 30, 2019

and

December 31, 2018.

In addition, the tables reflect the tax credits and tax benefits, amortization of the investment and the net impact to our income tax provision for the

six

months ended

June 30, 2019

and

2018.

	At June 30, 2019						For the Six Months Ended June 30, 2019
	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 (Expense)
Raymond James California Housing Opportunities Fund II	$	2,000	$	932	$	28	$	100	$	90	$	10
WNC Institutional Tax Credit Fund 38, L.P.		1,000		444		—		54		45		9
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,160		315		112		110		2
California Affordable Housing Fund		2,454		219		—		12		20		(8	)
Total	$	7,954	$	2,755	$	343	$	278	$	265	$	13

	At December 31, 2018						For the Six Months Ended June 30, 2018
	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 (Expense)
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,022	$	28	$	100	$	89	$	11
WNC Institutional Tax Credit Fund 38, L.P.		1,000		489		—		63		53		10
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,270		315		113		111		2
California Affordable Housing Fund		2,454		239		—		15		24		(9	)
Total	$	7,954	$	3,020	$	343	$	291	$	277	$	14

The following tables present our generated tax credits and tax benefits from investments in qualified affordable housing partnerships for the

three

and

six

months ended

June 30, 2019

and

2018.

	For the Three Months Ended
	June 30, 2019				June 30, 2018
(Amounts in thousands)	Generated		Tax Benefits From		Generated		Tax Benefits from
Qualified Affordable Housing Partnerships	Tax Credits		Taxable Losses		Tax Credits		Taxable Losses
Raymond James California Housing Opportunities Fund II	$	43	$	7	$	43	$	8
WNC Institutional Tax Credit Fund 38, L.P.		23		4		28		4
Merritt Community Capital Corporation Fund XV, L.P.		48		8		48		8
California Affordable Housing Fund		—		6		1		6
Total	$	114	$	25	$	120	$	26

	For the Six Months Ended
	June 30, 2019				June 30, 2018
(Amounts in thousands)	Generated		Tax Benefits From		Generated		Tax Benefits from
Qualified Affordable Housing Partnerships	Tax Credits		Taxable Losses		Tax Credits		Taxable Losses
Raymond James California Housing Opportunities Fund II	$	85	$	15	$	85	$	15
WNC Institutional Tax Credit Fund 38, L.P.		46		8		56		7
Merritt Community Capital Corporation Fund XV, L.P.		96		16		96		17
California Affordable Housing Fund		—		12		2		13
Total	$	227	$	51	$	239	$	52

The following table reflects the net income tax benefit and (expense) at

June 30, 2019

that is expected to be recognized over the remaining lives of the investments and has been updated to reflect the lower tax rate in the Tax Cuts and Jobs Act enacted

December 22, 2017.

(Amounts in thousands)
Qualified Affordable Housing Partnerships:	Raymond James		WNC Institutional		Merritt Community		California			Total Net
Anticipated net income tax benefit (expense)	California Housing		Tax Credit		Capital Corporation		Affordable			Income Tax
less amortization of investments	Opportunities Fund II		Fund 38, L.P.		Fund XV, L.P		Housing Fund			Benefit
2019	$	14	$	13	$	3	$	(10	)	$	20
2020		19		17		4		(14	)		26
2021		19		16		4		(14	)		25
2022		19		14		3		(13	)		23
2023 and thereafter		32		27		6		(32	)		33
Total	$	103	$	87	$	20	$	(83	)	$	127