NOTE 13 – QUALIFIED AFFORDABLE HOUSING PROJECTS AND OTHER TAX CREDIT INVESTMENTS

Old National is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved qualified affordable housing, renewable energy, or other renovation or community revitalization projects. As of June 30, 2018, Old National expects to recover its remaining investments using the tax credits that are generated by the investments.

The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments at June 30, 2018 and December 31, 2017:

(dollars in thousands)

June 30, 2018

December 31, 2017

Investment

Accounting Method

Investment

Unfunded
Commitment (1)

Investment

Unfunded
Commitment

LIHTC

Proportional amortization

29,802

6,719

31,183

15,553

FHTC

Equity

5,201

10,710

10,645

12,040

CReED

Equity

704

1,502

704

1,502

Renewable Energy

Equity

15,136

18,588

22,364

19,771

Total

50,843

37,519

64,896

48,866

(1)	All commitments will be paid by Old National by 2027.

The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments for the three and six months ended June 30, 2018 and 2017:


(dollars in thousands)	Amortization Expense (1)		Tax Expense (Benefit) Recognized (2)
Three Months Ended June 30, 2018
LIHTC	$	643	$	(831	)
FHTC		5,444		(1,948	)
Renewable Energy		6,414		(2,882	)

Total	$	12,501	$	(5,661	)

Three Months Ended June 30, 2017
LIHTC	$	940	$	(1,298	)
FHTC		—		(1,519	)
CReED (3)		—		(606	)

Total	$	940	$	(3,423	)

Six Months Ended June 30, 2018
LIHTC	$	1,282	$	(1,662	)
FHTC		5,444		(3,896	)
Renewable Energy		7,129		(6,296	)

Total	$	13,855	$	(11,854	)

Six Months Ended June 30, 2017
LIHTC	$	1,881	$	(2,595	)
FHTC		—		(3,039	)
CReED (3)		—		(606	)

Total	$	1,881	$	(6,240	)

(1)	The amortization expense for the LIHTC investments is included in our income tax expense. The amortization expense for the FHTC and Renewable Energy tax credits is included in noninterest expense.

(2)	All of the tax benefits recognized are included in our income tax expense. The tax benefit recognized for the FHTC and Renewable Energy investments primarily reflects the tax credits generated from the investments, and excludes the net tax expense (benefit) of the investments’ income (loss).

(3)	The CReED tax credit investment qualifies for an Indiana state tax credit.