Qualified Affordable Housing Projects and Other Tax Credit Investments

12 Months Ended

Dec. 31, 2019

Qualified Affordable Housing Projects and Other Tax Credit Investments

NOTE 11 – 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. These investments are included in other assets on the balance sheet, with any unfunded commitments included with other liabilities. As of December 31, 2019, 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, 2019 and 2018:

(dollars in thousands)		December 31, 2019				December 31, 2018
				Unfunded				Unfunded
Investment	Accounting Method	Investment		Commitment (1)		Investment		Commitment
LIHTC	Proportional amortization	$	29,735	$	3,911	$	28,396	$	2,238
FHTC	Equity		22,403		17,886		16,815		17,945
CReED	Equity		—		—		17		538
Renewable Energy	Equity		7,523		4,129		9,176		17,827
Total		$	59,661	$	25,926	$	54,404	$	38,548

(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 2019, 2018, and 2017:

			Tax Expense
	Amortization		(Benefit)
(dollars in thousands)	Expense (1)		Recognized (2)
Year Ended December 31, 2019
LIHTC	$	3,168	$	(4,102	)
FHTC		1,113		(1,244	)
CReED (3)		13		—
Renewable Energy		1,623		(1,740	)
Total	$	5,917	$	(7,086	)

Year Ended December 31, 2018
LIHTC	$	2,585	$	(3,349	)
FHTC		9,206		(10,775	)
CReED (3)		687		(687	)
Renewable Energy		13,056		(14,566	)
Total	$	25,534	$	(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	)

(1)

The amortization expense for the LIHTC investments is 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.