Qualified Affordable Housing

12 Months Ended

Dec. 31, 2022

Investments in Affordable Housing Projects [Abstract]

QUALIFIED AFFORDABLE HOUSING

QUALIFIED AFFORDABLE HOUSING

As part of our responsibilities under the Community Reinvestment Act and due to their favorable federal income tax benefits, we invest in Low Income Housing partnerships, or LIHPs. As a limited partner in these operating partnerships, we receive tax credits and tax deductions for losses incurred by the underlying properties. Our maximum exposure to loss associated with these investments consists of the investments' fair value plus any unfunded commitments as well as the denial of the tax credits if the project is deemed non-compliant. We do not have any loss reserves recorded related to these investments because we believe the likelihood of any loss to be remote.

Our total investment in qualified affordable housing projects was $23.6 million at December 31, 2022 and $12.6 million at December 31, 2021. Amortization expense, included in other noninterest expense in the Consolidated Statements of Net Income was $1.4 million, $1.2 million and $3.2 million for the twelve months ended December 31, 2022, 2021 and 2020. The amortization expense was offset by tax credits of $1.2 million, $2.0 million and $2.2 million for the twelve months ended

December 31, 2022, 2021 and 2020 as a reduction to our federal tax provision.

In 2022, we entered into three new qualified affordable housing projects and committed to a total investment of $20.1 million for these new projects. As of December 31, 2022, $4.4 million of funds were invested into these new projects. No amortization expense or tax credits will be recognized for these new projects until complete.