Qualified Affordable Housing Projects and Other Tax Credit Investments

12 Months Ended

Dec. 31, 2018

Qualified Affordable Housing Projects and Other Tax Credit Investments

NOTE 10 – QUALIFIED AFFORDABLE HOUSING PROJECTS AND OTHER TAX CREDIT INVESTMENTS

Old National is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved qualified affordable housing, renewable energy, or other renovation or community revitalization projects. As of December 31, 2018, Old National expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments at December 31, 2018 and 2017:

(dollars in thousands)		December 31, 2018				December 31, 2017
				Unfunded				Unfunded
Investment	Accounting Method	Investment		Commitment (1)		Investment		Commitment
LIHTC	Proportional amortization	$	28,396	$	2,238	$	31,183	$	15,553
FHTC	Equity		16,815		17,945		10,645		12,040
CReED	Equity		17		538		704		1,502
Renewable Energy	Equity		9,176		17,827		22,364		19,771
Total		$	54,404	$	38,548	$	64,896	$	48,866

(1)	All commitments will be paid by Old National by 2027.

The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments during 2018, 2017, and 2016:

			Tax Expense
	Amortization		(Benefit)
(dollars in thousands)	Expense (1)		Recognized (2)
Year Ended December 31, 2018
LIHTC	$	2,585	$	(3,349	)
FHTC		9,206		(10,775	)
CReED (3)		687		(687	)
Renewable Energy		13,055		(14,566	)
Total	$	25,533	$	(29,377	)

Year Ended December 31, 2017
LIHTC	$	1,922	$	(2,666	)
FHTC		10,441		(11,348	)
CReED (3)		800		(1,074	)
Renewable Energy		492		(613	)
Total	$	13,655	$	(15,701	)

Year Ended December 31, 2016
LIHTC	$	804	$	(1,125	)
FHTC		—		—
CReED (3)		—		—
Total	$	804	$	(1,125	)

(1)

The amortization expense for the LIHTC investments are included in our income tax expense. The amortization expense for the FHTC, CReED, and Renewable Energy tax credits are included in noninterest expense.

(2)

All of the tax benefits recognized are included in our income tax expense. The tax benefit recognized for the FHTC, CReED, and Renewable Energy investments primarily reflects the tax credits generated from the investments and excludes the net tax expense/benefit of the investments’ income (loss).

(3)

The CReED tax credit investment qualifies for an Indiana state tax credit.