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Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2023
Regulatory Capital Requirements Under Banking Regulations [Abstract]  
Regulatory Capital Requirements Regulatory Capital Requirements
The Company and the Bank are 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 and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
Basel III Capital Requirements
The Company and the Bank are subject to Basel III capital guidelines. Basel III requires the Company and the Bank to maintain certain minimum ratios to meet capital adequacy requirements. It is management’s belief that, as of December 31, 2023, both the Company and the Bank met all capital adequacy requirements under Basel III. Management expects that the capital ratios for the Company and the Bank under Basel III will continue to exceed capital adequacy requirements. Management believes that, as of December 31, 2023, the Bank is well-capitalized under the regulatory framework for prompt corrective action.
Bank holding companies that qualify as “small bank holding companies” under the Policy Statement are exempt from the Federal Reserve’s consolidated capital adequacy ratios at the holding company level and instead are evaluated at the bank level. In May 2018, the Economic Growth Act was enacted. One of the Economic Growth Act’s highlights, with implications for us, was the asset threshold under the Policy Statement being increased from $1.0 billion to $3.0 billion, which benefits bank holding companies by, among various other items, allowing for an 18-month safety and soundness examination cycle as opposed to a 12-month examination cycle, changing to scaled biannual regulatory reporting requirements as opposed to quarterly regulatory reporting requirements, and not subjecting bank holding companies to capital adequacy guidelines on a consolidated basis. Because the Company had less than $3.0 billion in assets as of each of the June 30th measurement dates starting with the Economic Growth Act’s enactment and going through June 30, 2021, the Company has received benefits under the Policy Statement through 2022, except with regard to the timing of the Red River Bank safety and soundness exam by the FDIC and the OFI. Due to the timing of the asset balance determination for the Red River Bank safety and soundness examination, a 12-month examination cycle began in the second half of 2022. As of June 30, 2022 and 2023, the last applicable measurement dates, the Company had more than $3.0 billion in assets. Therefore, effective January 1, 2023, the Company no longer receives any benefits under the Policy Statement and became subject to consolidated capital requirements.
Capital amounts and ratios for the Company as of December 31, 2023 and 2022, are presented in the following table:
Regulatory Requirement
Actual
Minimum(1)
(dollars in thousands)AmountRatioAmountRatio
December 31, 2023
Total Risk-Based Capital$384,577 18.28 %$220,905 10.50 %
Tier I Risk-Based Capital$362,799 17.24 %$178,828 8.50 %
Common Equity Tier I Capital$362,799 17.24 %$147,270 7.00 %
Tier I Leverage Capital$362,799 11.56 %$125,575 4.00 %
December 31, 2022
Total Risk-Based Capital$356,001 17.39 %N/AN/A
Tier I Risk-Based Capital$335,373 16.38 %N/AN/A
Common Equity Tier I Capital$335,373 16.38 %N/AN/A
Tier I Leverage Capital$335,373 10.71 %N/AN/A
(1)Due to the full phase-in of the CCB, these are the Basel III regulatory minimum amounts and ratios. These amounts and ratios were labeled as “Minimum Plus CCB” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and prior filings.
Capital amounts and ratios for the Bank as of December 31, 2023 and 2022, are presented in the following table:
Regulatory Requirements
Actual
Minimum(1)
Well-Capitalized(2)
(dollars in thousands)AmountRatioAmountRatioAmountRatio
December 31, 2023
Total Risk-Based Capital$378,582 18.00 %$220,850 10.50 %$210,333 10.00 %
Tier I Risk-Based Capital$356,804 16.96 %$178,783 8.50 %$168,266 8.00 %
Common Equity Tier I Capital$356,804 16.96 %$147,233 7.00 %$136,716 6.50 %
Tier I Leverage Capital$356,804 11.37 %$125,538 4.00 %$156,923 5.00 %
December 31, 2022
Total Risk-Based Capital$344,867 16.85 %$214,915 10.50 %$204,681 10.00 %
Tier I Risk-Based Capital$324,239 15.84 %$173,979 8.50 %$163,745 8.00 %
Common Equity Tier I Capital$324,239 15.84 %$143,277 7.00 %$133,043 6.50 %
Tier I Leverage Capital$324,239 10.35 %$125,252 4.00 %$156,565 5.00 %
(1)Due to the full phase-in of the CCB, these are the Basel III regulatory minimum amounts and ratios. These amounts and ratios were labeled as “Minimum Plus CCB” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and prior filings.
(2)This column refers to the prompt corrective action requirements applicable to banks.
Community Bank Leverage Ratio Framework
As part of the directive under the Economic Growth Act, in September 2019, the FDIC and other federal bank regulatory agencies approved the CBLR framework. This optional framework became effective January 1, 2020, and is available to the Company and the Bank as an alternative to the Basel III risk-based capital framework. The CBLR framework provides for a simple measure of capital adequacy for certain community banking organizations. Specifically, depository institutions and depository institution holding companies that have less than $10.0 billion in total consolidated assets and meet other qualifying criteria, including a Tier I leverage ratio of greater than 9.00%, are considered qualifying community banking organizations eligible to opt into the CBLR framework and replace the applicable Basel III risk-based capital requirements.
As of December 31, 2023, the Company and the Bank qualify for the CBLR framework. Management does not intend to utilize the CBLR framework.