Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

In the normal course of business, there are various outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not reflected in the consolidated financial statements. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the consolidated balance sheets.

At December 31, 2022 and 2021, the Company had a reserve for unfunded commitments of $974,000 and $1.3 million, respectively, included in other liabilities on the consolidated balance sheet.

Financial instruments whose contract amount represents credit or funding risk were as follows at December 31:


(dollars in thousands; unaudited)	2022		2021
Credit Risk
Commitments to extend credit:
Commercial and industrial loans	$	81,568	$	70,848
Commercial and industrial loans - capital call lines	772,732		415,956
Construction – commercial real estate loans	109,715		90,946
Construction – residential real estate loans	32,827		43,339
Residential real estate loans	374,735		101,715
Commercial real estate loans	35,024		23,248
Consumer and other loans	793,563		163,510
Total commitments to extend credit	$	2,200,164	$	909,562
Standby letters of credit	$	3,064	$	3,040
Funding Risk
Equity investment commitment	$	988	$	1,090

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commercial and industrial loan commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. As of December 31, 2022, $1.57 billion of the $2.20 billion in total commitments to extend credit were unconditionally cancelable. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. The type of collateral held varies but may include accounts receivable, inventory, property and equipment, and income- producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company’s policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. No losses were incurred in 2022 or 2021 under these commitments.

Commitments to extend credit on CCBX loans are included in the table above and are summarized below:


(dollars in thousands; unaudited)	2022		2021
Commitments to extend credit:
Commercial and industrial loans	$	952	$	—
Commercial and industrial loans - capital call lines	772,732		415,956
Residential real estate loans	329,193		71,453
Consumer and other loans	792,447		162,266
Total commitments to extend credit	$	1,895,324	$	649,675

As of December 31, 2022, $1.57 billion in CCBX commitments to extend credit are unconditionally cancelable, compared to $162.3 million at December 31, 2021. The increase in unconditionally cancelable commitments is attributed to growth in CCBX loans. Commitments that are unconditionally cancelable allow us to better manage loan growth, credit concentrations and liquidity. We also limit CCBX partners to a maximum aggregate customer loan balance originated and held on our balance sheet, as shown in the table below.


(dollars in thousands; unaudited)	Type of Lending	Maximum Portfolio Size
Commercial and industrial loans:
Capital call lines	Business - Venture Capital	$	350,000
All other commercial & industrial loans	Business - Small Business	65,856
Real estate loans:
Home equity lines of credit	Home Equity - Secured Credit Cards	250,000
Consumer and other loans:
Credit cards	Credit Cards - Primarily Consumer	600,770
Installment loans	Consumer	1,048,134
Other consumer and other loans	Consumer - Secured Credit Builder & Unsecured consumer	190,240
		2,505,000

The Company also has agreements with certain key officers that provide for potential payments upon retirement, disability, termination, change in control and death.

The Company is subject to claims and lawsuits which arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the financial position of the Company.