Low Income Housing Tax Credits and Other Tax Credit Investments

12 Months Ended

Dec. 31, 2023

Investments in Affordable Housing Projects [Abstract]

Low Income Housing Tax Credits and Other Tax Credit Investments

Low Income Housing Tax Credits and Other Tax Credit Investments

The Community Reinvestment Act (“CRA”) encourages banks to meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate income. The Company has primarily invested in separate LIHTC projects, also referred to as qualified affordable housing projects, which provide the Company with tax credits and operating loss tax benefits over a period of 15 years. The return on these investments is generally generated through tax credits and tax losses. In addition to LIHTC projects, the Company invests in new market tax credit projects that qualify for CRA credits and eligible projects that qualify for renewable energy and historic tax credits.

As of December 31, 2023 and 2022, the Company had $223.4 million and $131.3 million, respectively, in tax credit investments that were included in other assets in the Consolidated Balance Sheets.

When permissible, the Company accounts for its investments in LIHTC projects using the proportional amortization method, under which it amortizes the initial cost of the investment in proportion to the amount of the tax credits and other tax benefits received and recognizes that amortization as a component of income tax expense. The net investment in the housing projects is included in other assets on the Consolidated Balance Sheets. The Company will continue to use the proportional amortization method on any new qualifying LIHTC investments.

The following table presents the Company’s investments in LIHTC projects using the proportional amortization method as of the dates indicated:

	As of December 31,
	2023		2022
	(In thousands)
Current recorded investment included in other assets	$	221,190	$	128,765
Commitments to fund qualified affordable housing projects included in recorded investment noted above	149,207		84,145

The following table presents additional information related to the Company’s investments in LIHTC projects for the periods indicated:

	For the Year Ended December 31,
	2023		2022		2021
	(In thousands)
Tax credits and other tax benefits recognized	$	11,624	$	9,146	$	6,484
Amortization expense included in income tax expense	9,577		7,503		5,753

The Company accounts for certain other investments in renewable energy projects using the equity method of accounting. These investments in renewable energy projects are included in other assets on the Consolidated Balance Sheets and totaled $2.2 million and $2.6 million at December 31, 2023 and 2022, respectively. There were no outstanding commitments related to these investments as of either December 31, 2023 or December 31, 2022.