Investment in Qualified Affordable Housing

Park makes certain equity investments in various limited partnerships that sponsor affordable housing projects. The purpose of these investments is to achieve a satisfactory return on capital, help create affordable housing opportunities, and to assist the Company to achieve our goals associated with the Community Reinvestment Act.

Previously, these investments were accounted for under the cost method of accounting with amortization of the investment being recorded in miscellaneous other expense and tax benefits recognized in the provision for income taxes.

During the first quarter of 2015, Park adopted ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects, and elected the proportional amortization method with amortization expense and tax benefits recognized through the provision for income taxes. This ASU is required to be applied retrospectively to all periods presented. As a result of these changes, Park recorded a cumulative-effect adjustment to beginning retained earnings.

The following table summarizes the impact of retrospective application to the balance sheet and income statement for all periods presented as well as the year ended December 31, 2014:



(in thousands)	December 31, 2014
Other assets
As previously reported	$	140,803
As reported under the new guidance	138,746

Total assets
As previously reported	$	7,003,256
As reported under the new guidance	7,001,199

Retained earnings
As previously reported	$	486,541
As reported under the new guidance	484,484

Total equity
As previously reported	$	698,598
As reported under the new guidance	696,541



(in thousands)	3 months ended June 30, 2014		6 months ended June 30, 2014		12 months ended December 31, 2014
Total other expense
As previously reported	$	48,196	$	95,894	$	195,234
As reported under the new guidance	46,241		92,020		187,510

Income tax expense
As previously reported	$	7,469	$	13,505	$	28,602
As reported under the new guidance	9,441		17,438		36,459

Net income
As previously reported	$	21,827	$	41,446	$	84,090
As reported under the new guidance	21,810		41,387		83,957

The table below details the balances of Park’s affordable housing tax credit investments and related unfunded commitments as of June 30, 2015 and December 31, 2014.



(in thousands)	June 30, 2015		December 31, 2014
Affordable housing tax credit investments	$	54,457	$	48,911
Unfunded commitments	21,339		16,629

During each of the three months ended June 30, 2015 and 2014, Park recognized amortization expense of $1.7 million which was included within the provision for income taxes. During the six months ended June 30, 2015 and 2014, Park recognized amortization expense of $3.5 million and $3.4 million, respectively, which was included within the provision for income taxes. Additionally, during the three months ended June 30, 2015 and 2014, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $2.3 million and $2.2 million, respectively. For the six months ended June 30, 2015 and 2014, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $4.5 million and $4.4 million, respectively.