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Note 23 - Renewable Energy Tax Credit Investment

12 Months Ended

Dec. 31, 2024

Renewable Energy Tax Credit Investment [Text Block]

(23)	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 a solar energy producing facility through limited liability companies. At December 31, 2024 and 2023, the balance of the Bank’s investments were $401,000 and $306,000, respectively, and is reflected in other assets on the consolidated balance sheets. The unfunded commitment related to the solar energy tax credit investments was $276,000 at December 31, 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, 2025. The Bank had fully funded its commitment in the solar energy tax credit investment at December 31, 2023. In addition, in order to facilitate the loan to be obtained by the entity constructing the qualified solar energy producing facility for the Bank’s 2023 investment, the Bank obtained a $2.0 million standby letter of credit through the FHLB for the Bank’s total committed investment. The letter of credit was issued June 2, 2023 and expired April 30, 2024.

The investment is accounted for using the proportional amortization method. During 2024 and 2023, the Bank recognized amortization expense of $1.9 million and $1.7 million, respectively, which was included in income tax expense on the consolidated statements of income. Additionally, during 2024 and 2023, the Bank recognized tax credits and other tax benefits from its solar energy tax credit investment of $2.3 million and $1.8 million, respectively, which was included in income tax expense on the consolidated statements of income.