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Regulatory Capital

9 Months Ended

Sep. 30, 2024

NOTE 11. Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s Consolidated Financial Statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s and consolidated Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

The minimum capital level requirements include: (i) a Tier 1 leverage ratio of 4%; (ii) common equity Tier 1 risk weighted capital ratio of 4.5%; (iii) a Tier 1 risk weighted capital ratio of 6%; and (iv) a total risk weighted capital ratio of 8% for all institutions. The Bank is also required to maintain a “capital conservation buffer” of 2.5% above the regulatory minimum capital ratios which results in the following minimum ratios: (i) a common equity Tier 1 risk weighted capital ratio of 7.0%; (ii) a Tier 1 risk weighted capital ratio of 8.5%; and (iii) a total risk weighted capital ratio

of 10.5%. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that could be utilized for such actions.

Under a policy of the Fderal Reserve applicable to bank holding companies with consolidated assets of less than $3 billion, the Company is not subject to capital regulations.

The following table shows information regarding the Company’s and the Bank’s regulatory capital levels at September 30, 2024 and at December 31, 2023, as if the Company were subject to minimum capital requirements.


		Actual			Required for Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Regulations *
		Amount	Ratio		Amount		Ratio		Amount		Ratio

		(Dollars in thousands)
As of September 30, 2024
Total risk-based capital (to risk-weighted assets)
Company Consolidated	$	321,177	15.23	%	$	168,717	8.00	%	$	210,896	10.00	%
Bank		313,386	14.97			167,498	8.00			209,373	10.00
Common equity tier 1 (to risk-weighted assets)
Company Consolidated		284,799	13.50			94,903	4.50			137,082	6.50
Bank		287,197	13.72			94,218	4.50			136,092	6.50
Tier 1 capital (to risk-weighted assets)
Company Consolidated		294,799	13.98			126,538	6.00			168,717	8.00
Bank		287,197	13.72			125,624	6.00			167,498	8.00
Tier 1 capital (to average total assets)
Company Consolidated		294,799	11.94			98,722	4.00			123,403	5.00
Bank		287,197	11.67			98,411	4.00			123,014	5.00

As of December 31, 2023
Total risk-based capital (to risk-weighted assets)
Company Consolidated	$	298,293	14.43	%	$	165,370	8.00	%	$	206,712	10.00	%
Bank		287,206	14.02			163,911	8.00			204,889	10.00
Common equity tier 1 (to risk-weighted assets)
Company Consolidated		262,454	12.70			93,020	4.50			134,363	6.50
Bank		261,584	12.76			92,200	4.50			133,178	6.50
Tier 1 capital (to risk-weighted assets)
Company Consolidated		272,454	13.18			124,027	6.00			165,370	8.00
Bank		261,584	12.76			122,934	6.00			163,911	8.00
Tier 1 capital (to average total assets)
Company Consolidated		272,454	11.14			97,800	4.00			122,250	5.00
Bank		261,584	10.74			97,355	4.00			121,693	5.00

*Prompt Corrective Action requirements only apply to the Bank.

- 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.

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