Note 20 - Qualified Affordable Housing Partnership Investments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Qualified Affordable Housing Project Investments [Text Block]

NOTE

20

. QUALIFIED AFFORDABLE HOUSING PARTNERSHIP INVESTMENTS

We have invested in

four

separate Qualified Affordable Housing Partnerships that generate Low Income Housing Tax Credits (“LIHTC”), 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. 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

3%

and

5%

over the life of the investment.

None

of the original investments will be repaid.

Our investments in LIHTC totaled

$2.5

million at

December 31, 2019.

These investments are recorded in

Other Assets

with a corresponding funding obligation of

$338

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

December 31, 2019

and

2018.

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, 2019

and

2018.

	At December 31, 2019						For the year ended December 31, 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
Raymond James California Housing Opportunities Fund II	$	2,000	$	852	$	22	$	199	$	170	$	29
WNC Institutional Tax Credit Fund 38, L.P.		1,000		400		—		108		89		19
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,067		316		224		203		21
California Affordable Housing Fund		2,454		210		—		25		29		(4	)
Total	$	7,954	$	2,529	$	338	$	556	$	491	$	65

	At December 31, 2018						For the year ended December 31, 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
Raymond James California Housing Opportunities Fund II	$	2,000	$	1,022	$	28	$	200	$	179	$	21
WNC Institutional Tax Credit Fund 38, L.P.		1,000		489		—		126		100		26
Merritt Community Capital Corporation Fund XV, L.P.		2,500		1,270		315		226		206		20
California Affordable Housing Fund		2,454		239		—		31		43		(12	)
Total	$	7,954	$	3,020	$	343	$	583	$	528	$	55

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

December 31, 2019

and

2018.

	For the Years Ended December 31,
	2019				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	$	170	$	29	$	170	$	30
WNC Institutional Tax Credit Fund 38, L.P.		93		15		111		15
Merritt Community Capital Corporation Fund XV, L.P.		192		32		192		34
California Affordable Housing Fund		—		25		5		26
Total	$	455	$	101	$	478	$	105

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

December 31, 2019,

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

(Amounts in thousands)
Qualified Affordable Housing Partnerships:	Raymond James		WNC Institutional		Merritt Community		California			Total
Anticipated income tax benefit, net less	California Housing		Tax Credit		Capital Corporation		Affordable Housing			Income Tax
amortization of investments	Opportunities Fund II		Fund 38, L.P.		Fund XV, L.P		Fund			Benefit, Net
2020	$	14	$	12	$	3	$	(10	)	$	19
2021		19		16		4		(14	)		25
2022		19		14		3		(13	)		23
2023		18		13		3		(36	)		(2	)
2024 and thereafter		16		14		4		—			34
Total	$	86	$	69	$	17	$	(73	)	$	99