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Note 6 - Renewable Energy Tax Credit Investment

9 Months Ended

Sep. 30, 2024

Renewable Energy Tax Credit Investment [Text Block]

6.	Renewable Energy Tax Credit Investment

On April 17, 2024 and April 21, 2023, the Bank entered into agreements to invest in investment tax credits generated by solar energy producing facilities through limited liability companies. At September 30, 2024 and December 31, 2023, the balance of the Bank’s investments in the limited liability companies was $1.1 million and $306,000, respectively, and was reflected in other assets on the consolidated balance sheets. The unfunded commitment related to the solar energy tax credit investments was $1.9 million at September 30, 2024 and is reflected in other liabilities on the consolidated balance sheets. The Bank expects to fulfill the commitment as capital calls are made by December 31, 2024. The Bank had fully funded its commitment in the solar energy tax credit investment at December 31, 2023.

The investment is accounted for using the proportional amortization method. During the three month periods ended September 30, 2024 and 2023, the Bank recognized amortization expense of $335,000 and $997,000, respectively, as a component of income tax expense on the consolidated statements of income. Additionally, during the three month periods ended September 30, 2024 and 2023, the Bank recognized income tax credits and other income tax benefits from its solar energy tax credit investment of $443,000 and $1.1 million, respectively, which was included in income tax expense on the consolidated statements of income. During the nine month periods ended September 30, 2024 and 2023, the Bank recognized amortization expense of $1.2 million and $997,000, respectively, as a component of income tax expense on the consolidated statements of income. Additionally, during the nine month periods ended September 30, 2024 and 2023, the Bank recognized income tax credits and other income tax benefits from its solar energy tax credit investment of $1.5 million and $1.1 million, respectively, which was included in income tax expense on the consolidated statements of income.