Investments in Qualified Affordable Housing Partnerships

12 Months Ended

Dec. 31, 2023

Federal Home Loan Banks [Abstract]

Investments in Qualified Affordable Housing Partnerships

Note 9 – 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.

The Company records its investments in qualified affordable housing partnerships using either the proportional amortization method, if certain criteria are met, 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 are 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. At December 31, 2023 and 2022 the carrying value of these investments was $88.8 million and $71.9 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 and other tax benefits on these investments are recognized as a component of income tax expense. At December 31, 2023 and 2022 the carrying value of these investments was $250,000 and $1.0 million, respectively.

The Company’s net investment in qualified affordable housing projects that generate LIHTC and other tax benefits at December 31, 2023 and 2022 was $89.1 million and $72.9 million, respectively, and is recorded in other assets in the consolidated statements of financial condition. The total unfunded commitments related to the investments in qualified affordable housing partnerships totaled $32.1 million and $15.4 million at December 31, 2023 and 2022, respectively, and were recorded in accrued expenses and other liabilities.

As of December 31, 2023, the Company’s unfunded affordable housing partnerships commitments were estimated to be paid as follows:

(Dollars in thousands)	Amount
Year Ending December 31,
2024	$	11,065
2025	11,840
2026	3,892
2027	2,458
2028	439
Thereafter	2,376
Total unfunded commitments	$	32,070

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, 2023, 2022, and 2021.

(Dollars in thousands)	2023		2022		2021
Tax credit and other tax benefits recognized	$	17,016	$	15,091	$	15,037
Amortization of investments	$	13,839	$	13,070	$	13,660

There were no impairment losses related to LIHTC investments for the years ended December 31, 2023, 2022, and 2021.