Qualified Affordable Housing

12 Months Ended

Dec. 31, 2023

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 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 investments in LIHPs represent unconsolidated variable interest entities, or VIEs, and the assets and liabilities of the partnerships are not recorded on our balance sheet. We have determined that we are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact their economic performance.

Our total investment in qualified affordable housing projects was $33.5 million at December 31, 2023 and $23.6 million at December 31, 2022. Amortization expense, included in other noninterest expense in the Consolidated Statements of Net Income was $2.0 million, $1.4 million and $1.2 million for the twelve months ended December 31, 2023, 2022 and 2021. The amortization expense was offset by tax credits of $2.6 million, $1.2 million and $2.0 million for the twelve months ended December 31, 2023, 2022 and 2021 as a reduction to our federal tax provision.

We did not invest in any new qualified affordable housing projects in 2023. As of December 31, 2023, the aggregate commitment for existing projects was $12.0 million. No amortization expense or tax credits will be recognized for these projects until complete.