Note 6 - Renewable Energy Tax Credit Investment

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Renewable Energy Tax Credit Investment [Text Block]

6. Renewable Energy Tax Credit Investment

On April 17, 2024 and April 21, 2023, the Bank entered into agreements to invest in investment tax credits generated by a solar energy producing facilities through limited liability companies.  At March 31, 2024 and December 31, 2023, the balance of the Bank’s investments in the limited liability companies was $1.8 million and $306,000, respectively, and was reflected in other assets on the consolidated balance sheets.  The unfunded commitment related to the solar energy tax credit investments was $2.0 million at March 31, 2024 and is reflected in other liabilities on the consolidated balance sheets. The Bank expects to fulfill the commitment as capital calls are made by December 31, 2024.  The Bank had fully funded its commitment in the solar energy tax credit investment at December 31, 2023.

The investment is accounted for using the proportional amortization method.  During the three month period ended March 31, 2024, the Bank recognized amortization expense of $505,000 as a component of income tax expense on the consolidated statements of income.  Additionally, during the three month period ended March 31, 2024, the Bank recognized income tax credits and other income tax benefits from its solar energy tax credit investment of $596,000, which was included in income tax expense on the consolidated statements of income.