Regulatory Capital Matters

6 Months Ended

Jun. 30, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Capital Matters:

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action by regulators that, if undertaken, could have a direct material effect on the financial statements. Management believes that as of June 30, 2023, the Company and the Bank meet all capital adequacy requirements to which they are subject.

The FDIC and other federal banking regulators revised the risk-based capital requirements applicable to financial holding companies and insured depository institutions, including the Company and the Bank, to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision (“Basel III”).

The common equity tier 1 capital, tier 1 capital and total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. The leverage ratio is calculated by dividing tier 1 capital by adjusted average total assets.

Basel III limits capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity tier 1 capital, tier 1 capital and total capital to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. Excluding the additional buffer, Basel III requires the Company and the Bank to maintain (i) a minimum ratio of common equity tier 1 capital to risk-weighted assets of at least 4.5%, (ii) a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0%, (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0% and (iv) a minimum leverage ratio of at least 4.0%.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At June 30, 2023 and December 31, 2022, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Actual and required capital amounts and ratios, which do not include the capital conservation buffer, are presented below at June 30, 2023 and December 31, 2022:


	Actual					Requirement For Capital Adequacy Purposes:					To be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2023
Common equity tier 1 capital ratio
Consolidated	$	374,278		10.25	%	$	164,288		4.5	%	N/A		N/A
Bank		391,584		10.75	%		163,977		4.5	%		236,855		6.5	%
Total risk based capital ratio
Consolidated		502,235		13.76	%		292,068		8.0	%	N/A		N/A
Bank		426,541		11.71	%		291,514		8.0	%		364,393		10.0	%
Tier 1 risk based capital ratio
Consolidated		392,278		10.74	%		219,051		6.0	%	N/A		N/A
Bank		391,584		10.75	%		218,636		6.0	%		291,514		8.0	%
Tier 1 leverage ratio
Consolidated		392,278		7.68	%		204,281		4.0	%	N/A		N/A
Bank		391,584		7.70	%		203,408		4.0	%		254,261		5.0	%

December 31, 2022
Common equity tier 1 capital ratio
Consolidated	$	403,307		13.71	%	$	132,349		4.5	%	N/A		N/A
Bank		372,679		12.71	%		131,968		4.5	%	$	190,620		6.5	%
Total risk based capital ratio
Consolidated		523,285		17.79	%		235,288		8.0	%	N/A		N/A
Bank		399,657		13.62	%		234,609		8.0	%		293,262		10.0	%
Tier 1 risk based capital ratio
Consolidated		421,307		14.32	%		176,466		6.0	%	N/A		N/A
Bank		372,679		12.71	%		175,957		6.0	%		234,609		8.0	%
Tier 1 leverage ratio
Consolidated		421,307		9.84	%		171,233		4.0	%	N/A		N/A
Bank		372,679		8.76	%		170,245		4.0	%		212,807		5.0	%

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details