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Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

During the nine months ended September 30, 2024, $686.9 million in CCBX loans were transferred to loans held for sale, with $679.4 million in loans sold. The Company sells CCBX loans back to the originating partner to manage loan portfolio size by partner and by loan category, with such limits established and documented in the relevant partner agreement. There were $7.6 million loans held for sale as of September 30, 2024 and no loans held for sale as of December 31, 2023.

The composition of the loan portfolio is as follows as of the periods indicated:


	September 30,		December 31,
	2024		2023
	(dollars in thousands; unaudited)
Community Bank
Commercial and industrial loans	$	152,161	$	149,502
Real estate loans:
Construction, land and land development loans	163,051		157,100
Residential real estate loans	212,467		225,391
Commercial real estate loans	1,362,452		1,303,533
Consumer and other loans:
Other consumer and other loans	14,173		1,628
Gross Community Bank loans receivable	1,904,304		1,837,154
CCBX
Commercial and industrial loans:
Capital call lines	$	103,924	$	87,494
All other commercial & industrial loans	36,494		54,298
Real estate loans:
Residential real estate loans	265,402		238,035
Consumer and other loans:
Credit cards	633,691		505,837
Other consumer and other loans	482,228		310,574
Gross CCBX loans receivable	1,521,739		1,196,238
Total gross loans receivable	3,426,043		3,033,392
Net deferred origination fees and premiums	(7,211)		(7,300)
Loans receivable	$	3,418,832	$	3,026,092

Accrued interest on loans, which is excluded from the balances in the preceding table of loans receivable, was $22.8 million and $25.6 million at September 30, 2024 and December 31, 2023, respectively, and was included in accrued interest receivable on the Company's consolidated balance sheets.

Included in commercial and industrial loans as of September 30, 2024 and December 31, 2023, is $103.9 million and $87.5 million, respectively in capital call lines, provided to venture capital firms through one of our BaaS clients. These loans are secured by the capital call rights and are individually underwritten to the Bank’s credit standards by our BaaS client and the underwriting is reviewed by the Bank on every line/loan. Also included in commercial and industrial loans are Paycheck Protection Program (“PPP”) loans of $2.5 million at September 30, 2024 and $3.0 million at December 31, 2023. PPP loans are 100% guaranteed by the Small Business Administration (“SBA”).

Consumer and other loans includes overdrafts of $9.1 million and $2.8 million at September 30, 2024 and December 31, 2023, respectively. Community bank overdrafts were $6,000 and $255,000 at September 30, 2024 and December 31, 2023, respectively and CCBX overdrafts were $9.1 million and $2.5 million at September 30, 2024 and December 31, 2023.

The Company has pledged loans totaling $944.2 million at September 30, 2024 and $982.2 million at December 31, 2023, for borrowing lines at the FHLB and FRB. Loans are pledged to increase and maintain the borrowing capacity of the Bank in the event of a liquidity crisis.

The balance of SBA and United States Department of Agriculture ("USDA") loans and participations sold and serviced for others totaled $4.5 million and $8.7 million at September 30, 2024 and December 31, 2023, respectively.

The gross balance of Main Street Lending Program (“MSLP”) loans participated and serviced for others, totaled $51.4 million at September 30, 2024 and $53.4 million at December 31, 2023, with $2.7 million in MSLP loans on the balance

sheet and included in commercial and industrial loans at September 30, 2024 compared to $2.8 million at December 31, 2023. Servicing is retained on the gross balance.

The Company, through the community bank, at times purchases individual loans at fair value as of the acquisition date. The Company held purchased loans with remaining balances that totaled $6.2 million and $8.1 million as of September 30, 2024 and December 31, 2023, respectively. Unamortized premiums on these loans totaled $118,000 and $154,000 as of September 30, 2024 and December 31, 2023, respectively, and are amortized into interest income over the life of the loans.

The Company, through the community bank, has purchased participation loans with remaining balances totaling $26.2 million and $53.5 million as of September 30, 2024 and December 31, 2023, respectively. These loans are included in the applicable loan category depending upon the collateral and purpose of the individual loan and underwritten to the Bank's credit standards.

The Company, through the community bank, purchased loans from CCBX partners, at par, through agreements with those CCBX partners, and those loans had a remaining balance of $64.9 million as of September 30, 2024 and $46.5 million as of December 31, 2023. As of September 30, 2024, $61.1 million is included in consumer and other loans and $3.7 million is included in commercial and industrial loans, compared to $40.2 million in consumer and other loans and $6.3 million in commercial and industrial loans as of December 31, 2023.

The following is a summary of the Company’s loan portfolio segments:

Commercial and industrial loans – Commercial and industrial loans are secured by business assets including inventory, receivables and machinery and equipment of businesses located generally in the Company’s primary market area and capital calls on venture and investment funds. Also included in commercial and industrial loans are $36.5 million in unsecured CCBX partner loans. Loan types include revolving lines of credit, term loans, PPP loans, and loans secured by liquid collateral such as cash deposits or marketable securities. Also included in commercial and industrial loans are loans to other financial institutions. Additionally, the Company issues letters of credit on behalf of its customers. Risk arises primarily due to the difference between expected and actual cash flows of the borrowers. In addition, the recoverability of the Company’s investment in these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing these loans may fluctuate as market conditions change. In the case of loans secured by accounts receivable, the recovery of the Company’s investment is dependent upon the borrower’s ability to collect amounts due from its customers.

As of September 30, 2024, $103.9 million in outstanding CCBX capital call lines are included in commercial and industrial loans compared to $87.5 million at December 31, 2023. Capital call lines are provided to venture capital firms. These loans are secured by the capital call rights and are individually underwritten to the Bank’s credit standards by our CCBX partner and the underwriting is reviewed by the Bank on every line/loan.

Construction, land and land development loans – The Company originates loans for the construction of 1-4 family, multifamily, and Commercial Real Estate (“CRE”) properties in the Company’s market area. Construction loans are considered to have higher risks due to construction completion and timing risk, the ultimate repayment being sensitive to interest rate changes, government regulation of real property and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans, as adverse economic conditions may negatively impact the real estate market, which could affect the borrower’s ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change. The Company occasionally originates land loans for the purpose of facilitating the ultimate construction of a home or commercial building. The primary risks include the borrower’s ability to pay and the inability of the Company to recover its investment due to a material decline in the fair value of the underlying collateral.

Residential real estate loans – Residential real estate includes various types of loans for which the Company holds real property as collateral. Included in this segment are first and second lien single family loans, occasionally purchased by the Company to diversify its loan portfolio, and rental portfolios secured by one-to-four family homes. The primary risks of residential real estate loans include the borrower’s inability to pay, material decreases in the value of the collateral, and significant increases in interest rates which may make the loan unprofitable.

As of September 30, 2024, $265.4 million in loans originated through CCBX partners are included in residential real estate loans, compared to $238.0 million at December 31, 2023. These home equity lines of credit are secured by

residential real estate and are accessed by using a credit card. Home equity lines of credit are classified as residential real estate per regulatory guidelines.

Commercial real estate (includes owner occupied and nonowner occupied) loans – Commercial real estate loans include various types of loans for which the Company holds real property as collateral. We have commercial mortgage loans totaling $388.7 million that are collateralized by owner-occupied real-estate and $574.2 million that are collateralized by non-owner-occupied real estate, as well as $389.0 million of multi-family residential loans and $10.7 million of farmland loans, as of September 30, 2024. The primary risks of commercial real estate loans include the borrower’s inability to pay, material decreases in the value of the collateralized real estate and significant increases in interest rates, which may make the real estate loan unprofitable. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.

Consumer and other loans – The community bank originates a limited number of consumer loans, generally for banking customers only, which consist primarily of lines of credit, saving account secured loans, and auto loans. CCBX originates consumer loans including credit cards, consumer term loans and secured and unsecured lines of credit. This loan category includes overdrafts. Repayment of these loans is dependent on the borrower’s ability to pay and the fair value of the underlying collateral, if any.

As of September 30, 2024, $1.12 billion in CCBX loans are included in consumer and other loans compared to $816.4 million at December 31, 2023. Not included in this category is $265.4 million and $238.0 million as of September 30, 2024 and December 31, 2023, respectively, in home equity lines of credit that are secured by residential real estate and are accessed by using a credit card. These credit card accessed home equity lines of credit are classified as residential real estate per regulatory guidelines.

Past Due and Nonaccrual Loans

The following table illustrates an age analysis of past due loans as of the dates indicated:


	30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days or More Past Due and Still Accruing
	(dollars in thousands; unaudited)
September 30, 2024
Community Bank
Commercial and industrial loans	$	271	$	—	$	271	$	151,890	$	152,161	$	—
Real estate loans:
Construction, land and land development	—		—		—		163,051		163,051		—
Residential real estate	—		45		45		212,422		212,467		—
Commercial real estate	—		831		831		1,361,621		1,362,452		—
Consumer and other loans	2		—		2		14,171		14,173		—
Total community bank	$	273	$	876	$	1,149	$	1,903,155	$	1,904,304	$	—
CCBX
Commercial and industrial loans:
Capital call lines	$	—	$	—	$	—	$	103,924	$	103,924	$	—
All other commercial & industrial loans	2,496		1,593		4,089		32,405		36,494		1,566
Real estate loans:
Residential real estate loans	3,648		3,025		6,673		$	258,729	$	265,402	3,025
Consumer and other loans:
Credit cards	30,476		37,269		67,745		$	565,946	$	633,691	34,562
Other consumer and other loans	21,534		6,412		27,946		454,282		482,228		6,111
Total CCBX	$	58,154	$	48,299	$	106,453	$	1,415,286	$	1,521,739	$	45,264
Total Consolidated	$	58,427	$	49,175	$	107,602	$	3,318,441	3,426,043		$	45,264
Less net deferred origination fees and premiums									(7,211)
Loans receivable									$	3,418,832


	30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days or More Past Due and Still Accruing
	(dollars in thousands; unaudited)
December 31, 2023
Community Bank
Commercial and industrial loans	$	—	$	—	$	—	$	149,502	$	149,502	$	—
Real estate loans:
Construction, land and land development	—		—		—		157,100		157,100		—
Residential real estate	44		—		44		225,347		225,391		—
Commercial real estate	—		7,145		7,145		1,296,388		1,303,533		—
Consumer and other loans	2		—		2		1,626		1,628		—
Total community bank	$	46	$	7,145	$	7,191	$	1,829,963	$	1,837,154	$	—
CCBX
Commercial and industrial loans:
Capital call lines	$	—	$	—	$	—	$	87,494	$	87,494	$	—
All other commercial & industrial loans	3,433		2,086		5,519		48,779		54,298		2,086
Real estate loans:
Residential real estate loans	3,198		1,115		4,313		$	233,722	$	238,035	$	1,115
Consumer and other loans:
Credit cards	28,383		34,835		63,218		$	442,619	$	505,837	$	34,835
Other consumer and other loans	29,645		8,488		38,133		$	272,441	$	310,574	$	8,488
Total CCBX	64,659		46,524		111,183		1,085,055		1,196,238		46,524
Total Consolidated	64,705		53,669		118,374		2,915,018		3,033,392		46,524
Less net deferred origination fees and premiums									(7,300)
Loans receivable									$	3,026,092

There were $45.3 million in CCBX loans past due 90 days or more and still accruing interest as of September 30, 2024, and $46.5 million as of December 31, 2023. This is attributed to loans originated through CCBX lending partners which continue to accrue interest up to 180 days past due. As of September 30, 2024 and December 31, 2023, $44.0 million and $44.3 million, respectively of loans past due 90 days or more and still accruing interest are covered by credit enhancements provided by our CCBX partners that protect the Bank against losses.

The accrual of interest on community bank loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due or when they are 90 days past due as to either principal or interest, unless they are well secured and in the process of collection. Installment/closed-end, and revolving/open-end consumer loans originated through CCBX lending partners typically continue to accrue interest until 120 and 180 days past due, respectively and an allowance is recorded through provision expense for these expected losses. Some CCBX partners have instituted a collection practice that places certain loans on nonaccrual status to improve collectibility. As of September 30, 2024, $17.0 million of these nonaccrual CCBX loans were less than 90 days past due. For installment/closed-end and revolving/open-end consumer loans originated through CCBX lending partners with balances outstanding beyond 120 days and 180 days past due, respectively, principal and capitalized interest outstanding is charged off against the allowance and accrued interest outstanding is reversed against interest income. These consumer loans are reported as nonperforming/substandard, 90 days or more days past due and still accruing.

When loans are placed on nonaccrual status, all accrued interest is reversed from current period earnings. Payments received on nonaccrual loans are generally applied as a reduction to the loan principal balance. If the likelihood of further loss is removed, the Company will recognize interest on a cash basis only. Loans may be returned to accruing status if the Company believes that all remaining principal and interest is fully collectible and there has been at least six months of sustained repayment performance since the loan was placed on nonaccrual.

An analysis of nonaccrual loans by category consisted of the following at the periods indicated:


	September 30,						December 31,
	2024						2023
	Total Nonaccrual		Nonaccrual with No ACL		Nonaccrual with ACL		Total Nonaccrual		Nonaccrual with No ACL
	(dollars in thousands; unaudited)
Community Bank
Commercial and industrial loans	$	198	$	—	$	198	$	—	$	—
Real estate loans:

Residential real estate	44		44		—		170		170
Commercial real estate	831		831		—		7,145		7,145



Total Community Bank nonaccrual loans	$	1,073	$	875	$	198	$	7,315	$	7,315
CCBX
Commercial and industrial loans	$	333	$	—	$	333	$	—	$	—




Consumer and other loans:
Credit cards	7,987		—		7,987		—		—
Consumer and other consumer loans	11,713		—		11,713		—		—
Total CCBX nonaccrual loans	$	20,033	$	—	$	20,033	$	—	$	—
Total Consolidated nonaccrual loans	$	21,106	$	875	$	20,231	$	7,315	$	7,315

In some circumstances, the Company modifies loans in response to borrower financial difficulty, and generally provides for a temporary modification of loan repayment terms. In order for a modified loan to be considered for accrual status, the loan’s collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow for an extended period of time, usually at least six months in duration.

No loans were modified for community bank borrowers experiencing financial difficulty in the three and nine months ended September 30, 2024 and 2023.

The following table presents the CCBX loans at September 30, 2024 that were both experiencing financial difficulty and were modified during the twelve months prior to September 30, 2024 by class and by type of modification. The percentage of the loans that were modified to borrowers in financial distress as compared to the total CCBX loans of each class is also presented below.


	Principal Forgiveness		Term Extension		Interest Rate Reduction		Principal Forgiveness & Payment Delay		Principal Forgiveness, Payment Delay & Term Extension		Total		Total Class of Financing Receivable
	(dollars in thousands; unaudited)
CCBX
Commercial and industrial loans:

All other commercial & industrial loans	$	—	$	1,830	$	—	$	333	$	—	$	2,163	5.93	%


Consumer and other loans:
Credit cards	7,991		—		12,119		—		—		20,110		3.17
Other consumer and other loans	—		6,993		—		8,559		341		15,893		3.30
Total	$	7,991	$	8,823	$	12,119	$	8,892	$	341	$	38,166	1.12	%

The Company has committed to lend additional amounts totaling $328,000 to the borrowers included in the table above.

The performance of loans modified is monitored to understand the effectiveness of the modification efforts. The following table presents the performance of such loans that have been modified in the last 12 months:


	30-89 Days Past Due		90 Days or More Past Due		Total Past Due
	(dollars in thousands; unaudited)
CCBX
Commercial and industrial loans:

All other commercial & industrial loans	$	452	$	147	$	599


Consumer and other loans:
Credit cards	4,684		6,090		10,774
Other consumer and other loans	1,862		913		2,775
Total CCBX	$	6,998	$	7,150	$	14,148

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the preceding 12 months ended September 30, 2024:


	Principal Forgiveness		Weighted Average Interest Rate Reduction		Weighted Average Term Extension (years)
	(dollars in thousands; unaudited)
CCBX
Commercial and industrial loans:

All other commercial & industrial loans	$	159	—	%	0.98


Consumer and other loans:
Credit cards	4,447		14.2		n/a
Other consumer and other loans	4,594		—		1.16
Total CCBX	$	9,200	14.2	%	1.13

The following table presents the total of loans that had a payment default during the preceding 12 months ended September 30, 2024 and which were modified for borrowers experiencing financial difficulty in the twelve months prior to that default.


	Principal Forgiveness		Term Extension		Interest Rate Reduction		Principal Forgiveness & Payment Delay		Principal Forgiveness, Payment Delay & Term Extension		Total
	(dollars in thousands; unaudited)
CCBX
Commercial and industrial loans:

All other commercial & industrial loans	—		$	1,159	$	—	$	198	$	—	$	1,357


Consumer and other loans:
Credit cards	4,839		—		9,095		—		—		13,934
Other consumer and other loans	—		4,619		—		4,104		102		8,825
Total	$	4,839	$	5,778	$	9,095	$	4,302	$	102	$	24,116

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged-off against the allowance for credit losses. Therefore, the loan balance is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

Credit Quality and Credit Risk

Federal regulations require that the Company periodically evaluate the risks inherent in its loan portfolio. In addition, the Company’s regulatory agencies have authority to identify problem loans and, if appropriate, require them to be reclassified. The Company establishes loan grades for loans at the origination of the loan. Changes to community bank loan grades are considered at the time new information about the performance of a loan becomes available, including the receipt of updated financial information from the borrower and after loan reviews. For consumer loans, the Bank follows the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property. The Company classifies some loans as Watch or Other Loans Especially Mentioned (“OLEM”). Loans classified as Watch are performing assets but have elements of risk that require more monitoring than other performing loans and are reported in the OLEM column in the following table. Loans classified as OLEM are assets that continue to perform but have shown deterioration in credit quality and require close monitoring. There are three classifications for problem loans: Substandard, Doubtful, and Loss. Substandard loans have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Revolving (open-ended loans, such as credit cards) and installment (closed end) consumer loans originated through CCBX partners typically continue to accrue interest until they are charged-off at 120 days past due for installment loans (primarily unsecured loans to consumers) and 180 days past due for revolving loans (primarily credit cards) and are classified as substandard once they are 90 days past due. CCBX partners may place certain loans on nonaccrual status prior to achieving these past due timelines. Doubtful loans have the weaknesses of loans classified as Substandard, with additional characteristics that suggest the weaknesses make collection or recovery in full after liquidation of collateral questionable on the basis of currently existing facts, conditions, and values. There is a high possibility of loss in loans classified as Doubtful. A loan classified as Loss is considered uncollectible and of such little value that continued classification of the credit as a loan is not warranted. If a loan or a portion thereof is classified as Loss, it must be charged-off, meaning the amount of the loss is charged against the allowance for credit losses, thereby reducing that reserve.

Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination.

The following tables show the risk category of community bank loans by year of origination for the periods indicated, based on the most recent analysis performed as of each period end:


	Term Loans Amortized Cost Basis by Origination Year
Community Bank	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of September 30, 2024
Commercial and industrial loans
Risk rating
Pass	$	7,450	$	12,757	$	44,470	$	13,751	$	8,652	$	8,202	$	52,199	$	1,172	$	148,653
Other Loan Especially Mentioned	—		—		—		—		—		—		3,310		—		3,310
Substandard	—		—		—		—		—		—		198		—		198
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial and industrial loans - All other commercial and industrial loans	$	7,450	$	12,757	$	44,470	$	13,751	$	8,652	$	8,202	$	55,707	$	1,172	$	152,161
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	167	$	—	$	—	$	167

Real estate loans - Construction, land and land development loans
Risk rating
Pass	$	23,117	$	89,408	$	34,624	$	11,612	$	761	$	2,198	$	904	$	—	$	162,624
Other Loan Especially Mentioned	—		—		—		427		—		—		—		—		427
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate loans - Construction, land and land development loans	$	23,117	$	89,408	$	34,624	$	12,039	$	761	$	2,198	$	904	$	—	$	163,051
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	Term Loans Amortized Cost Basis by Origination Year
Community Bank	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of September 30, 2024
Real estate loans - Residential real estate loans
Risk rating
Pass	$	12,465	$	31,201	$	38,282	$	38,310	$	28,733	$	33,412	$	26,524	$	16	$	208,943
Other Loan Especially Mentioned	—		—		1,087		—		11		—		100		—		1,198
Substandard	2,281		—		—		—		—		—		45		—		2,326
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate loans - Residential real estate loans	$	14,746	$	31,201	$	39,369	$	38,310	$	28,744	$	33,412	$	26,669	$	16	$	212,467
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Real estate loans - Commercial real estate loans
Risk rating
Pass	$	84,096	$	275,685	$	286,086	$	224,753	$	132,924	$	321,016	$	8,548	$	1,672	$	1,334,780
Other Loan Especially Mentioned	14,449		—		3,205		5,409		160		3,618		—		—		26,841
Substandard	—		—		—		—		831		—		—		—		831
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate loans - Commercial real estate loans	$	98,545	$	275,685	$	289,291	$	230,162	$	133,915	$	324,634	$	8,548	$	1,672	$	1,362,452
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	223	$	—	$	—	$	223


	Term Loans Amortized Cost Basis by Origination Year
Community Bank	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of September 30, 2024
Consumer and other loans - Other consumer and other loans
Risk rating
Pass	$	252	$	57	$	9,076	$	3	$	657	$	3,930	$	198	$	—	$	14,173
Other Loan Especially Mentioned	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer and other loans - Other consumer and other loans	$	252	$	57	$	9,076	$	3	$	657	$	3,930	$	198	$	—	$	14,173
Current period gross charge-offs	$	25	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	25

Total community bank loans receivable
Risk rating
Pass	$	127,380	$	409,108	$	412,538	$	288,429	$	171,727	$	368,758	$	88,373	$	2,860	$	1,869,173
Other Loan Especially Mentioned	14,449		—		4,292		5,836		171		3,618		3,410		—		31,776
Substandard	2,281		—		—		—		831		—		243		—		3,355
Doubtful	—		—		—		—		—		—		—		—		—
Total community bank loans	$	144,110	$	409,108	$	416,830	$	294,265	$	172,729	$	372,376	$	92,026	$	2,860	$	1,904,304
Current period gross charge-offs	$	25	$	—	$	—	$	—	$	—	$	390	$	—	$	—	$	415


	Term Loans Amortized Cost Basis by Origination Year
Community Bank	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of December 31, 2023
Commercial and industrial loans
Risk rating
Pass	$	15,882	$	56,428	$	15,566	$	10,044	$	12,429	$	1,442	$	33,412	$	1,020	$	146,223
Other Loan Especially Mentioned	—		—		—		111		—		—		3,168		—		3,279
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial and industrial loans - All other commercial and industrial loans	$	15,882	$	56,428	$	15,566	$	10,155	$	12,429	$	1,442	$	36,580	$	1,020	$	149,502
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	46	$	—	$	—	$	46

Real estate loans - Construction, land and land development loans
Risk rating
Pass	$	75,129	$	49,275	$	20,811	$	2,859	$	914	$	1,598	$	—	$	—	$	150,586
Other Loan Especially Mentioned	—		—		3,589		2,325		—		—		—		—		5,914
Substandard	—		—		—		—		—		—		600		—		600
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate loans - Construction, land and land development loans	$	75,129	$	49,275	$	24,400	$	5,184	$	914	$	1,598	$	600	$	—	$	157,100
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	Term Loans Amortized Cost Basis by Origination Year
Community Bank	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of December 31, 2023


Real estate loans - Residential real estate loans
Risk rating
Pass	$	32,352	$	41,362	$	39,137	$	30,259	$	31,982	$	22,429	$	24,396	$	18	$	221,935
Other Loan Especially Mentioned	—		1,098		2,020		28		—		40		100		—		3,286
Substandard	—		—		—		—		—		—		—		170		170
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate loans - Residential real estate loans	$	32,352	$	42,460	$	41,157	$	30,287	$	31,982	$	22,469	$	24,496	$	188	$	225,391
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Real estate loans - Commercial real estate loans
Risk rating
Pass	$	244,169	$	303,329	$	222,287	$	144,602	$	126,437	$	233,482	$	7,509	$	1,719	$	1,283,534
Other Loan Especially Mentioned	—		3,257		5,891		171		506		2,099		100		—		12,024
Substandard	—		—		—		924		6,900		—		151		—		7,975
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate loans - Commercial real estate loans	$	244,169	$	306,586	$	228,178	$	145,697	$	133,843	$	235,581	$	7,760	$	1,719	$	1,303,533
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	Term Loans Amortized Cost Basis by Origination Year
Community Bank	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of December 31, 2023

Consumer and other loans - Other consumer and other loans
Risk rating
Pass	$	323	$	272	$	5	$	679	$	38	$	164	$	147	$	—	$	1,628
Other Loan Especially Mentioned	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer and other loans - Other consumer and other loans	$	323	$	272	$	5	$	679	$	38	$	164	$	147	$	—	$	1,628
Current period gross charge-offs	$	18	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	18

Total community bank loans receivable
Risk rating
Pass	$	367,855	$	450,666	$	297,806	$	188,443	$	171,800	$	259,115	$	65,464	$	2,757	$	1,803,906
Other Loan Especially Mentioned	—		4,355		11,500		2,635		506		2,139		3,368		—		24,503
Substandard	—		—		—		924		6,900		—		751		170		8,745
Doubtful	—		—		—		—		—		—		—		—		—
Total community bank loans	$	367,855	$	455,021	$	309,306	$	192,002	$	179,206	$	261,254	$	69,583	$	2,927	$	1,837,154
Current period gross charge-offs	$	18	$	—	$	—	$	—	$	—	$	46	$	—	$	—	$	64

The Company considers the performance of the CCBX loan portfolio and its impact on the allowance for credit losses. For CCBX loans, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the loans in CCBX based on payment activity for the periods indicated:


	Term Loans Amortized Cost Basis by Origination Year
CCBX	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of September 30, 2024
Commercial and industrial loans - Capital call lines
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	103,924	$	—	$	103,924
Nonperforming	—		—		—		—		—		—		—		—		—
Total commercial and industrial loans - Capital call lines	$	—	$	—	$	—	$	—	$	—	$	—	$	103,924	$	—	$	103,924
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and industrial loans - All other commercial and industrial loans
Payment performance
Performing	$	—	$	26,555	$	4,288	$	5	$	9	$	—	$	4,044	$	—	$	34,901
Nonperforming	—		885		186		—		—		—		522		—		1,593
Total commercial and industrial loans - All other commercial and industrial loans	$	—	$	27,440	$	4,474	$	5	$	9	$	—	$	4,566	$	—	$	36,494
Current period gross charge-offs	$	285	$	9,446	$	1,632	$	2	$	—	$	—	$	887	$	—	$	12,252

Real estate loans - Residential real estate loans
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	251,269	$	11,108	$	262,377
Nonperforming	—		—		—		—		—		—		3,025		—		3,025
Total real estate loans - Residential real estate loans	$	—	$	—	$	—	$	—	$	—	$	—	$	254,294	$	11,108	$	265,402
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	3,297	$	—	$	3,297


	Term Loans Amortized Cost Basis by Origination Year
CCBX	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of September 30, 2024
Consumer and other loans - Credit cards
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	591,089	$	53	$	591,142
Nonperforming	—		—		—		—		—		—		42,549		—		42,549
Total consumer and other loans - Credit cards	$	—	$	—	$	—	$	—	$	—	$	—	$	633,638	$	53	$	633,691
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	97,818	$	—	$	97,818

Consumer and other loans - Other consumer and other loans
Payment performance
Performing	$	294,373	$	129,771	$	27,508	$	3,282	$	51	$	261	$	20,570	$	—	$	475,816
Nonperforming	1,342		3,049		1,508		256		—		47		210		—		6,412
Total consumer and other loans - Other consumer and other loans	$	295,715	$	132,820	$	29,016	$	3,538	$	51	$	308	$	20,780	$	—	$	482,228
Current period gross charge-offs	$	5,263	$	27,138	$	12,353	$	3,094	$	24	$	254	$	5,598	$	—	$	53,724


Total CCBX loans receivable
Payment performance
Performing	$	294,373	$	156,326	$	31,796	$	3,287	$	60	$	261	$	970,896	$	11,161	$	1,468,160
Nonperforming	1,342		3,934		1,694		256		—		47		46,306		—		53,579
Total CCBX loans	$	295,715	$	160,260	$	33,490	$	3,543	$	60	$	308	$	1,017,202	$	11,161	$	1,521,739
Current period gross charge-offs	$	5,548	$	36,584	$	13,985	$	3,096	$	24	$	254	$	107,600	$	—	$	167,091


	Term Loans Amortized Cost Basis by Origination Year
CCBX	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of December 31, 2023
Commercial and industrial loans - Capital call lines
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	87,494	$	—	$	87,494
Nonperforming	—		—		—		—		—		—		—		—		—
Total commercial and industrial loans - Capital call lines	$	—	$	—	$	—	$	—	$	—	$	—	$	87,494	$	—	$	87,494
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and industrial loans - All other commercial and industrial loans
Payment performance
Performing	$	42,267	$	6,835	$	9	$	11	$	—	$	—	$	3,090	$	—	$	52,212
Nonperforming	1,333		277		—		—		—		—		476		—		2,086
Total commercial and industrial loans - All other commercial and industrial loans	$	43,600	$	7,112	$	9	$	11	$	—	$	—	$	3,566	$	—	$	54,298
Current period gross charge-offs	$	3,848	$	2,502	$	15	$	16	$	—	$	—	$	224	$	—	$	6,605

Real estate loans - Residential real estate loans
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	212,435	$	24,485	$	236,920
Nonperforming	—		—		—		—		—		—		1,115		—		1,115
Total real estate loans - Residential real estate loans	$	—	$	—	$	—	$	—	$	—	$	—	$	213,550	$	24,485	$	238,035
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	4,641	$	—	$	4,641


	Term Loans Amortized Cost Basis by Origination Year
CCBX	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted To Term		Total
	(dollars in thousands; unaudited)
As of December 31, 2023

Consumer and other loans - Credit cards
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	469,049	$	1,953	$	471,002
Nonperforming	—		—		—		—		—		—		33,655		1,180		34,835
Total consumer and other loans - Credit cards	$	—	$	—	$	—	$	—	$	—	$	—	$	502,704	$	3,133	$	505,837
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	61,358	$	—	$	61,358

Consumer and other loans - Other consumer and other loans
Payment performance
Performing	$	216,024	$	50,732	$	6,888	$	98	$	418	$	317	$	27,609	$	—	$	302,086
Nonperforming	4,229		3,074		477		—		7		10		691		—		8,488
Total consumer and other loans - Other consumer and other loans	$	220,253	$	53,806	$	7,365	$	98	$	425	$	327	$	28,300	$	—	$	310,574
Current period gross charge-offs	$	17,815	$	43,115	$	11,574	$	84	$	346	$	217	$	6,178	$	—	$	79,329

Total CCBX loans receivable
Payment performance
Performing	$	258,291	$	57,567	$	6,897	$	109	$	418	$	317	$	799,677	$	26,438	$	1,149,714
Nonperforming	5,562		3,351		477		—		7		10		35,937		1,180		46,524
Total CCBX loans	$	263,853	$	60,918	$	7,374	$	109	$	425	$	327	$	835,614	$	27,618	$	1,196,238
Current period gross charge-offs	$	21,663	$	45,617	$	11,589	$	100	$	346	$	217	$	72,401	$	—	$	151,933

Allowance for Credit Losses ("ACL")

CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by reimbursing most losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for CCBX credit losses and provision for unfunded commitments are recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements). Expected losses are recorded in the allowance for credit losses. The credit enhancement asset is reduced when credit enhancement payments are received from the CCBX partner or taken from the partner's cash reserve account. CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by reimbursing the Bank for the losses. If the partner is unable to fulfill their contracted obligations then the Bank could be exposed to the loss of the reimbursement and credit enhancement income. In accordance with the program agreement for one CCBX partner, the Company was responsible for credit losses on approximately 5% of a $400.8 million portfolio, or $19.8 million in loans that are without credit enhancement reimbursements as of September 30, 2024. Prior to April 1, 2024, the Company was responsible for 10% of the credit losses on this portfolio.

The following tables summarize the allocation of the ACL, as well as the activity in the ACL attributed to various segments in the loan portfolio, as of and for the three and nine months ended September 30, 2024 and for the three and nine months ended September 30, 2023:


	Commercial and Industrial		Construction, Land, and Land Development		Residential Real Estate		Commercial Real Estate		Consumer and Other		Unallocated		Total
	(dollars in thousands; unaudited)
Three Months Ended September 30, 2024
ACL balance, June 30, 2024	$	12,103	$	6,110	$	15,532	$	7,319	$	106,850	$	—	$	147,914

Provision for credit losses or (recapture)	1,804		(2,558)		(1,580)		1,994		71,925		—		71,585
	13,907		3,552		13,952		9,313		178,775		—		219,499
Loans charged-off	(3,852)		—		(1,290)		(223)		(47,940)		—		(53,305)
Recoveries of loans previously charged-off	390		—		3		—		3,676		—		4,069
Net charge-offs	(3,462)		—		(1,287)		(223)		(44,264)		—		(49,236)
ACL balance, September 30, 2024	$	10,445	$	3,552	$	12,665	$	9,090	$	134,511	$	—	$	170,263

Nine Months Ended September 30, 2024
ALLL balance, December 31, 2023	$	8,877	$	6,386	$	13,049	$	7,441	$	81,205	$	—	$	116,958

Provision for credit losses or (recapture)	13,183		(2,834)		2,906		1,872		197,866		—		212,993
	22,060		3,552		15,955		9,313		279,071		—		329,951
Loans charged-off	(12,419)		—		(3,297)		(223)		(151,567)		—		(167,506)
Recoveries of loans previously charged-off	804		—		7		—		7,007		—		7,818
Net charge-offs	(11,615)		—		(3,290)		(223)		(144,560)		—		(159,688)
ACL balance, September 30, 2024	$	10,445	$	3,552	$	12,665	$	9,090	$	134,511	$	—	$	170,263










Three Months Ended September 30, 2023
ACL balance, June 30, 2023	$	9,551	$	6,539	$	8,849	$	6,952	$	78,871	$	—	$	110,762

Provision for credit losses or (recapture)	2,771		132		3,517		456		20,281		—		27,157
	12,322		6,671		12,366		7,408		99,152		—		137,919
Loans charged-off	(2,328)		—		(1,476)		—		(34,075)		—		(37,879)
Recoveries of loans previously charged-off	1		—		2		—		1,042		—		1,045
Net (charge-offs) recoveries	(2,327)		—		(1,474)		—		(33,033)		—		(36,834)
ACL Balance, September 30, 2023	$	9,995	$	6,671	$	10,892	$	7,408	$	66,119	$	—	$	101,085

Nine Months Ended September 30, 2023
ACL Balance, December 31, 2022	$	4,831	$	7,425	$	4,142	$	5,470	$	50,996	$	1,165	$	74,029
Impact of adopting CECL (ASC 326)	1,428		(1,589)		1,623		1,240		2,315		(1,165)		3,852
Provision for credit losses or (recapture)	7,247		835		8,283		698		106,236		—		123,299
	13,506		6,671		14,048		7,408		159,547		—		201,180
Loans charged-off	(3,515)		—		(3,158)		—		(97,672)		—		(104,345)
Recoveries of loans previously charged-off	4		—		2		—		4,244		—		4,250
Net charge-offs	(3,511)		—		(3,156)		—		(93,428)		—		(100,095)
ALLL Balance, September 30, 2023	$	9,995	$	6,671	$	10,892	$	7,408	$	66,119	$	—	$	101,085

There was a recapture of unfunded commitments of $1.3 million and a provision of $2.7 million respectively, for the three and nine months ended September 30, 2024. There was a provision for unfunded commitments of $96,000 and a recapture $96,000 respectively, for the three and nine months ended September 30, 2023.

The following table presents the collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans as of the dates indicated:


	Real Estate		Business Assets		Total		ACL
	(dollars in thousands; unaudited)
September 30, 2024
Commercial and industrial loans	$	—	$	198	$	198	$	140
Real estate loans:

Residential real estate	$	44	$	—	$	44	$	—
Commercial real estate	831		—		831		—
Total	$	875	$	198	$	1,073	$	140


	Real Estate		Total		ACL
	(dollars in thousands; unaudited)
December 31, 2023

Real estate loans:

Residential real estate	$	170	$	170	$	—
Commercial real estate	7,145		7,145		—
Total	$	7,315	$	7,315	$	—