Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable. A summary of proceedings outstanding at June 30, 2021 follows:

In February 2021, the Bank was notified of another set of PAGA and potential class claims alleged by letter to the California Labor and Workforce Development Agency transmitted on behalf of another former Bank employee. The notice to the California Labor and Workforce Development Agency, which is a prerequisite to a PAGA filing, alleged the same claims, class, and relief requests that are the subject of the lawsuit filed in November 2020, and disclosed no new claims. The former employee has also threatened individual claims similar to the other two former employees. Counsel for the plaintiffs have agreed to explore mediation of the threatened individual claims.

We intend to vigorously defend the filed class and PAGA complaint, the action filed by the employees as individuals, any subsequent related class action and PAGA filing, and any action filed by the former employee on whose behalf the draft complaint was provided.

The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. As a result, the Company is not able to reasonably estimate the amount or range of possible losses, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate.

At this time, we believe that the amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. Legal costs related to such claims are expensed as incurred.

Off-Balance Sheet Arrangements

In the normal course of business the Company makes commitments to extend credit to its customers as long as there are no violations of any conditions established in the contractual arrangements. These commitments are obligations that represent a potential credit risk to the Company, but are not reflected on the Company’s consolidated balance sheets. Total unused commitments to extend credit were $1,168,495,000 at June 30, 2021, and $1,114,193,000 at December 31, 2020. Unused commitments represented 41% outstanding gross loans at June 30, 2021, 43% at June 30, 2020, and 42% at December 31, 2020.

The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of the commitments to provide credit cannot be reasonably predicted because there is no certainty that lines of credit and letters of credit will ever be fully utilized. The following table presents the Company’s commitments to extend credit for the periods indicated:


	June 30, 2021						December 31, 2020
	Fixed		Variable				Fixed		Variable
	Rate		Rate		Total		Rate		Rate		Total

	(Dollars in thousands)
Unused lines of credit and commitments
to make loans	$	131,878	$	1,018,383	$	1,150,261	$	121,560	$	970,614	$	1,092,174
Standby letters of credit		2,877		15,357		18,234		3,049		18,970		22,019
	$	134,755	$	1,033,740	$	1,168,495	$	124,609	$	989,584	$	1,114,193

For the six months ended June 30, 2021, there was an increase of $23,000 to the allowance for credit losses on the Company’s off-balance sheet credit exposures. The increase in the allowance for credit losses for off-balance sheet credit exposures in the first six months of 2021 was driven by an increase in unused loan commitments. The allowance for credit losses on the Company’s off-balance sheet credit exposures was $1,101,000 at June 30, 2021 and $1,078,000 at December 31, 2020.