TAX CREDIT AND OTHER INVESTMENTS IN UNCONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2024

Investments, All Other Investments [Abstract]

TAX CREDIT AND OTHER INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 9. TAX CREDIT AND OTHER INVESTMENTS IN UNCONSOLIDATED ENTITIES

Busey has invested in certain tax-advantaged projects promoting affordable housing, new markets, and historic rehabilitation. These investments are designed to generate returns primarily though the realization of federal and state income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These investments are considered to be variable interest entities, and are accounted for under the equity, deferral, or proportional amortization practical expedient methods, as appropriate. Busey is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest and is not the primary beneficiary. Busey’s maximum exposure to loss related to its investments in these unconsolidated variable interest entities is limited to the carrying amount of the investment, net of any unfunded capital commitments and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. Busey believes potential losses from these investments are remote.

In addition, Busey has private equity investments, which are primarily in funds that invest in small businesses across diverse sectors including, but not limited to, financial technology, business services, manufacturing, agribusiness, healthcare, software as a service, environmental, and those that support the preservation of affordable housing.

Busey’s investments in these unconsolidated entities and related unfunded investment obligations are reflected in other assets and other liabilities on the Consolidated Balance Sheets (Unaudited), and are summarized in the table below for the periods indicated (dollars in thousands):


		As of
	Location	September 30, 2024		December 31, 2023
Investments in unconsolidated entities
Funded investments	Other assets	$	68,164	$	68,516
Unfunded investments	Other assets	68,200		58,552
Investments in unconsolidated entities		$	136,364	$	127,068

Unfunded investment obligations	Other liabilities	$	68,200	$	58,552

Upon adoption of ASU 2023-02 on January 1, 2024, Busey elected to apply the proportional amortization method in accounting for investments in tax-advantaged projects. Estimated income tax credits and other tax benefits related to these investments, net of investment amortization, are included as a component of our estimated annual effective tax rate used for the calculation of income taxes presented on the Consolidated Statements of Income (Unaudited). Actual amounts of income tax credits and other benefits, along with the investment amortization, are presented in the table below (dollars in thousands):


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024

Income tax credits and other tax benefits	$	4,040		$	11,941
Amortization of investments in tax-advantaged projects	3,575			10,593