Other Assets

12 Months Ended

Dec. 31, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

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 and proportional amortization method of accounting and are evaluated for impairment at the end of each reporting period.

Historic Rehabilitation Tax Credits

The Corporation invests in development entities through BOC Investment, LLC (“BOC”), Mitchell Street, and FBB Tax Credit, wholly-owned subsidiaries of FBB, to rehabilitate historic buildings. On June 30, 2022, the Corporation exercised the put option and exited the BOC entity. As of December 31, 2022, the Corporation had no remaining investment in the BOC. At December 31, 2022 and 2021, the net carrying value of the investments were $2.2 million and $2.3 million, respectively. During 2021, the Corporation had no activity related to these investments. During 2020, the Corporation invested $4.4 million in these partnerships, recognized $2.8 million in federal historic tax credits, and $1.9 million in impairment related to these investments. During the year ended December 31, 2020, the Corporation received $2.7 million in state tax credits, which were sold to a third party resulting in $275,000 gain on sale.

Low-Income Housing Tax Credits

The Corporation invests in development entities through FBB Tax Credit, wholly-owned subsidiaries of FBB, to develop buildings that offer low-income housing. These investments are accounted for using the proportional amortization method of accounting. At December 31, 2022 and 2021, the net carrying value of the investments were $13.5 million and $3.0 million, respectively. During 2022 and 2021, the Corporation invested $11.5 million and $3.0 million in these partnerships, respectively. During 2022, the Corporation recognized $1.4 million in tax benefit and $1.0 million in amortization related to these partnerships. During 2021, the Corporation did not recognize any tax benefit or amortization related to these partnerships. As of December 31, 2020, the Corporation had no low-income housing tax credit investments.

Other Investments

The Corporation’s equity investment in mezzanine funds, consisting of Aldine Capital Fund II, LP, Aldine Capital Fund III, LP, and Aldine Capital Fund IV, LP, totaled $12.8 million and $9.4 million as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Corporation has $6.4 million remaining of the original $15.0 million commitment to these partnerships. The Corporation’s share of these partnerships’ income included in other non-interest income in the Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 was $3.0 million, $2.5 million, and $520,000, respectively. The Corporation’s share of these partnerships’ losses included in other non-interest expense in the Consolidated Statements of Income for the year ended December 31, 2021, and 2020 was $24,000, and $99,000, respectively. There were no losses related to these investments during the year ended December 31, 2022.

The Corporation’s equity investment in Dane Workforce Housing Fund LLC, a Wisconsin limited liability company focused on community development by providing affordable workforce housing units in Dane County, Wisconsin, totaled $653,000 and $367,000 as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Corporation had a $320,000 commitment remaining of the original $1.0 million. The Corporation’s share of the investment fund’s income included in other non-interest income in the Consolidated Statements of Income for the year ended December 31, 2022 and 2021 was $8,000 and $2,000, respectively. The Corporation’s share of these partnerships’ losses included in other non-interest expense in the Consolidated Statements of Income for the year ended December 31, 2021 was $19,000. There were no losses for the year ended December 31, 2022. During 2020, the Corporation had no income or loss activity related to this investment.

The Corporation’s equity investment in BankTech Ventures, LP, a venture capital fund, focused on the community banking industry through strategic investments in growth-stage startups that directly support community banking needs, totaled $154,000 and $120,000 as of December 31, 2022 and 2021, respectively. The Corporation had a $780,000 commitment remaining of the original $1.0 million as of December 31, 2022. For the years ended December 31, 2022, 2021, and 2020, there was no income included in other non-interest income in the Consolidated Statements of Income related to this investment. The Corporation’s share of these partnerships’ losses included in other non-interest expense in the Consolidated Statements of Income for the year ended December 31, 2022 was $21,000. During 2021 and 2020, the Corporation had no loss activity related to this investment.

As of March 30, 2022, the Corporation surrendered its common shares for no gain or loss and exited the Trust II entity, which was subsequently dissolved. Previously, the Corporation was 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, 2021 is included in accrued interest receivable and other assets.

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


	December 31, 2022		December 31, 2021
	(In Thousands)
Accrued interest receivable	$	9,403	$	5,497
Net deferred tax asset	11,711		6,175
Investment in historic development entities	2,176		2,299
Investment in low-income housing development entity	13,514		2,964

Investment in limited partnerships	13,599		9,874
Investment in Trust II	—		315
Prepaid expenses	3,821		2,689
Other assets	8,883		9,577
Total accrued interest receivable and other assets	$	63,107	$	39,390