Investments in Qualified Affordable Housing Partnerships

12 Months Ended

Dec. 31, 2020

Investments in Qualified Affordable Housing Partnerships

The Company invests in certain affordable housing projects in the form of ownership interests in limited partnerships or limited liability companies that qualify for CRA credit and generate low income housing tax credits (“LIHTC”) and other tax benefits for the Company over an approximate 10 year period.

The Company records its investments in qualified affordable housing partnerships, using either the proportional amortization method or the cost method. Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits that are allocated to the Company over the period of the investment. The net benefits of these investments, which is comprised of tax credits and operating loss tax benefits, net of investment amortization, are recognized in the income statement as a component of income tax expense (benefit). At December 31, 2020 and 2019 the carrying value of these investments was $86.8 million and $49.9 million, respectively. For certain of the Company’s investments in qualified affordable housing partnerships that do not qualify for the application of the proportional amortization method, the Company applies the cost method. Under the cost method, the Company amortizes the initial cost of the investment as noninterest expense equally over the expected time period in which tax credits and other tax benefits will be received. Tax credits on these investments are recognized as a component of income tax expense (benefit). At December 31, 2020 and 2019 the carrying value of these investments was $3.0 million and $4.0 million, respectively.

The Company’s net investment in qualified affordable housing projects that generate LIHTC at December 31, 2020 and 2019 was $89.8 million and $53.9 million, respectively, and are recorded in other assets in the consolidated statement of financial condition. The change in the aggregate carrying value of these investments in 2020 is largely attributable to the acquisition of Opus in June 2020, through which the Company acquired approximately $45.4 million of investments in qualified affordable housing partnerships. The total unfunded commitments related to the investments in qualified affordable housing partnerships totaled $18.1 million and $21.4 million at December 31, 2020 and 2019, respectively, and are recorded under accrued expenses and other liabilities.

As of December 31, 2020, the Company’s unfunded affordable housing partnerships commitments were estimated to be paid as follows:


	Amount
Year Ending December 31,	(Dollars in thousands)
2021	$	10,548
2022	4,627
2023	1,032
2024	492
2025	250
Thereafter	1,129
Total unfunded commitments	$	18,078

The following table presents tax credits and other tax benefits generated by operating losses from qualified affordable housing projects as well as amortization expense associated with these investments for the years ended December 31, 2020, 2019, and 2018.


	2020		2019		2018
	(Dollars in thousands)
Tax credit and other tax benefits recognized	$	11,435	$	6,506	$	4,748
Amortization of investments	9,674		5,527		4,574

There were no impairment losses related to LIHTC investments for the years ended December 31, 2020, 2019, and 2018.