Other Assets

The Corporation is a limited partner in several limited partnership investments. The Corporation is not the general partner, does not have controlling ownership and is not the primary beneficiary in any of these limited partnerships and the limited partnerships have not been consolidated. These investments are accounted for using the equity method of accounting and are evaluated for impairment at the end of each reporting period.

Historic Rehabilitation Tax Credits

In 2015, the Corporation invested in a development entity through BOC, a wholly-owned subsidiary of FBB, to acquire, rehabilitate and operate a historic building in Madison, Wisconsin. At December 31, 2018 and 2017, the net carrying value of the investment was $104,000 and $174,000, respectively. During 2016, the Corporation contributed an additional $2.8 million to the project, recognized $3.8 million in historic tax credits related to this investment and $3.3 million in impairment to the underlying investment.

In 2016, the Corporation also invested in a development entity through Mitchell Street, a wholly-owned subsidiary of FBB, to rehabilitate a historic building in Milwaukee, Wisconsin. At December 31, 2018 and 2017, the net carrying value of the investment was $570,000. The Corporation contributed an additional $217,000 and $4.9 million to the project in 2018 and 2017, respectively. During 2017, the Corporation recognized $3.0 million in federal historic tax credits related to this investment and sold the state historic tax credits associated with the investment to a third party for a pre-tax gain of $210,000. During 2018 and 2017 the Corporation recognized $217,000 and $2.3 million, respectively, in impairment to the underlying investment.

In 2017, the Corporation also invested in a development entity through FBB Tax Credit, a wholly-owned subsidiary of FBB, to rehabilitate a historic building in Kenosha, Wisconsin. At December 31, 2018 and 2017, the net carrying value of the investment was $417,000. The aggregate capital contributions to the project will depend upon the final amount of the certified project costs, but are expected to approximate $2.1 million. The credits will be taken when the project is placed in service and are subject to a five-year recapture period.

In 2018, the Corporation also invested in a development entity through FBB Tax Credit, to rehabilitate a county courthouse in Waukesha, Wisconsin. At December 31, 2018, the net carrying value of the investment was $238,000. The aggregate capital contributions to the project will depend upon the final amount of the certified project costs, but are expected to approximate $2.2 million. During 2018, the project was partially in service, and therefore, the Corporation recognized $868,000 in federal historic tax credits related to this investment and $544,000 in impairment to the underlying investment.

In 2018, the Corporation also invested in a development entity through FBB Tax Credit, to rehabilitate two buildings in Milwaukee, Wisconsin. At December 31, 2018, the net carrying value of the investment was $324,000. The aggregate capital contributions to the project will depend upon the final amount of the certified project costs, but are expected to approximate $4.6 million. During 2018, the project was partially in service, and therefore, the Corporation recognized $1.3 million in federal historic tax credits related to this investment and $873,000 in impairment to the underlying investment.

New Market Tax Credits

The Corporation invested in a community development entity (“CDE”) through Rimrock Road, a wholly-owned subsidiary of FBB, to develop and operate a real estate project located in a low-income community. At December 31, 2018 and 2017, Rimrock Road had one CDE investment with a net carrying value of $6.1 million and $6.6 million respectively. The investment provides federal new market tax credits over the seven year compliance period through 2020. The remaining federal new market tax credit to be utilized was $900,000 as of December 31, 2018. The Corporation’s use of the federal new market tax credit during the years ended December 31, 2018 and 2017 was $450,000.

Other Investments

The Corporation has an equity investment in Aldine Capital Fund, LP, a mezzanine fund, of $600,000 and $904,000 recorded as of December 31, 2018 and 2017, respectively. The Corporation’s equity investment in Aldine Capital Fund II, LP, also a mezzanine fund, totaled $3.4 million as of December 31, 2018 and 2017. The Corporation’s equity investment in Aldine Capital Fund III, LP, also a mezzanine fund, totaled $188,000 as of December 31, 2018. The Corporation’s share of these partnerships’ income included in the Consolidated Statements of Income for the years ended December 31, 2018 and 2017 was $459,000 and $354,000, respectively.

The Corporation is the sole owner of $315,000 of common securities issued by Trust II. The purpose of Trust II was to complete the sale of $10.0 million of 10.50% fixed rate preferred securities. Trust II, a wholly owned subsidiary of the Corporation, is not consolidated into the financial statements of the Corporation. The investment in Trust II of $315,000 as of December 31, 2018 and 2017 is included in accrued interest receivable and other assets.

A summary of accrued interest receivable and other assets was as follows:



	December 31, 2018		December 31, 2017
	(In Thousands)
Accrued interest receivable	$	5,684	$	5,019
Net deferred tax asset	3,172		2,584
Investment in historic development entities	1,653		1,161
Investment in a community development entity	6,081		6,591
Investment in limited partnerships	4,176		4,261
Investment in Trust II	315		315
Fair value of interest rate swaps	4,637		942
Prepaid expenses	2,894		3,091
Other assets	6,039		5,884
Total accrued interest receivable and other assets	$	34,651	$	29,848