Tax Equity Investments

3 Months Ended

Mar. 31, 2024

Note 14 – Tax Equity Investments

The Company makes investments in the equity of certain limited partnerships or limited liability companies that typically qualify for credit under the Community Reinvestment Act. Certain of these equity investments are associated with affordable housing projects that generate LIHTC and other income tax benefits for the Company.

The Company typically accounts for tax equity investments using the proportional amortization method, if certain criteria are met. The election to account for tax equity investments using the proportional amortization method is done so on a tax credit program-by-tax credit program basis. Under the proportional amortization method, the Company amortizes the initial cost of the investment, which is inclusive of any commitments to make future equity contributions, in proportion to the income tax credits and other income tax benefits that are allocated to the Company over the period of the investment. The net benefits of these investments, which are comprised of income tax credits and operating loss income tax benefits, net of investment amortization, are recognized in the income statement as a component of income tax expense. At March 31, 2024 and December 31, 2023, the carrying value of these investments was $85.4 million and $88.8 million, respectively, and are included in other assets in the consolidated statements of financial position.

As of March 31, 2024, the Company’s unfunded commitments associated with tax equity investments, which comprise of investments in affordable housing partnerships, were estimated to be paid as follows:


(Dollars in thousands)	Amount
Year Ending December 31,
2024	$	10,085
2025	11,477
2026	4,297
2027	2,360
2028	419
Thereafter	2,509
Total unfunded commitments	$	31,147

The following table presents income tax credits and other income tax benefits, as well as amortization expense, associated with investments in qualified affordable housing partnerships where the proportional amortization method of accounting has been applied for the periods indicated.


	Three Months Ended
	March 31,		March 31,
(Dollars in thousands)	2024		2023
Tax credit and other tax benefits recognized (1)	$	4,217	$	3,776
Amortization of investments (1)	3,475		3,050

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(1) Amounts for income tax credits and other income tax benefits, as well as amortization of investments, are included in income tax expense in the consolidated statements of income, and change in accrued interest receivable and other assets, net line item on the consolidated statements of cash flows, for the periods presented above.

There was no non-income tax related activity associated with these investments recorded outside of income tax expense for the three months ended March 31, 2024 and 2023, respectively. There were no impairment losses recorded on tax equity investments during the three months ended March 31, 2024 and 2023, respectively.