Financial Instruments with Off-Balance-Sheet Risk

3 Months Ended

Mar. 31, 2024

Financial Instruments with Off-Balance-Sheet Risk

11. Financial Instruments with Off-Balance-Sheet Risk

To meet the financing needs of its clients, the Company is a party to financial instruments with off-balance-sheet risk in the normal course of business. These financial instruments are primarily comprised of commitments to extend credit, commitments to sell residential real estate mortgage loans, and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments assuming that the amounts are fully advanced, and that collateral or other security is of no value. The Company generally uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Off-balance-sheet financial instruments with contractual amounts that present credit risk include the following:


	March 31, 2024		December 31, 2023
	(dollars in thousands)
Financial instruments whose contractual amount represents credit risk:
Commitments to extend credit:
Unused portion of existing lines of credit	$	947,638	$	994,196
Origination of new loans		27,259		18,341
Standby letters of credit		32,266		34,063
Financial instruments whose notional amount exceeds the amount of credit risk:
Commitments to sell residential mortgage loans		276		795

CAMBRIDGE BANCORP 10-Q