INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

6 Months Ended

Jun. 30, 2023

Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

6. INVESTMENTS IN UNCONSOLIDATED ENTITIES

The components of the Company's investments in unconsolidated entities were as follows:


(dollars in thousands)	June 30, 2023		December 31, 2022
Investments in low income housing tax credit partnerships, net of amortization	$	39,511	$	40,939
Investments in common securities of statutory trusts	1,547		1,547
Investments in affiliates	115		110
Other	4,045		4,045
Total	$	45,218	$	46,641

The Company invests in low-income housing tax credit ("LIHTC") and other partnerships. The Company had commitments to fund LIHTC partnerships totaling $47.8 million and $47.8 million as of June 30, 2023 and December 31, 2022, respectively. Unfunded commitments related to LIHTC partnerships totaled $23.6 million at June 30, 2023 and December 31, 2022, and are

included in other liabilities in the Company's consolidated balance sheets. The investments are accounted for under the proportional amortization method and are included in investments in unconsolidated entities in the Company's consolidated balance sheets.

During the first quarter of 2022, the Company invested $2.0 million in Swell Financial, Inc. ("Swell"), which included $1.5 million in other intangible assets and services provided in exchange for Swell non-voting common stock and $0.5 million in cash in exchange for Swell preferred stock. The Company does not have the ability to exercise significant influence over Swell and the investment does not have a readily determinable fair value. As a result, the Company determined that the cost method of accounting for the investment was appropriate. The investment is included in investments in unconsolidated entities.

During the fourth quarter of 2022, Swell launched a consumer banking application that combined checking, credit and more into one integrated account, with CPB serving as the bank sponsor. Swell began with an alpha pilot, where members of its waitlist were invited to sign up for Swell Cash and Credit. The Company also collaborated with Swell and Elevate Credit, Inc. ("Elevate"), a provider of digital solutions. In the first quarter of 2023, Elevate was acquired by Park Cities Asset Management, LLC, who is also the largest investor in Swell. Swell did not have a material impact to the Company's financial statements during the six months ended June 30, 2023.

As a result of a variety of adverse factors affecting Swell’s business and its strategy, the portfolio of Swell Cash and Credit accounts, which were immaterial, were closed in June 2023 and CPB is no longer serving as the bank sponsor. The Company anticipates that it will enter into a transaction with Swell in the third quarter of 2023 whereby Swell will repurchase the Company’s entire preferred and common stock equity investment in exchange for cash (not to exceed $0.5 million), certain intellectual property rights and a platform usage fee related to products that may be launched by Swell or its affiliates in the future (not to exceed $1.5 million in value). The Company cannot provide any assurance that the transaction with Swell will be completed on the foregoing terms or at all. Due to the aforementioned events, the Company performed an impairment analysis and concluded the investment in Swell was not impaired as of June 30, 2023.

During the second quarter of 2021, the Company committed $2.0 million to the JAM FINTOP Banktech Fund, L.P., a venture capital investment fund designed to help develop and accelerate technology adoption at community banks across the United States. The Company had $1.1 million and $1.3 million in unfunded commitments related to the investment as of June 30, 2023 and December 31, 2022, respectively, which is recorded in other liabilities. The investment is accounted for under the cost method and is included in investment in unconsolidated entities.

The expected payments for the unfunded commitments of LIHTC and other partnerships as of June 30, 2023 for the remainder of fiscal year 2023, the next five succeeding fiscal years, and all years thereafter are as follows:


(dollars in thousands)
Year Ending December 31,	LIHTC		Other		Total
2023 (remainder)	$	9,693	$	1,063	$	10,756
2024	9,280		—		9,280
2025	4,248		—		4,248
2026	26		—		26
2027	26		—		26
2028	20		—		20
Thereafter	313		—		313
Total unfunded commitments	$	23,606	$	1,063	$	24,669

The following table presents amortization and tax credits recognized associated with our investments in LIHTC partnerships for the three and six months ended June 30, 2023 and June 30, 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
Proportional amortization method:
Amortization expense recognized in income tax expense	$	714	$	607	$	1,428	$	1,214
Tax credits recognized in income tax expense	892		709		1,784		1,418