Regulatory Matters

12 Months Ended

Dec. 31, 2023

The Bank is subject to regulatory capital requirements administered by the OCC. 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 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 its assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

In July 2013, the Federal bank regulatory agencies issued a final rule that revised their risk-based capital requirements and the method for calculating components of capital and of computing risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The rule established a common equity Tier 1 minimum capital requirement, increased the minimum capital ratios and assigned a higher risk weight to certain assets based on the risk associated with these assets. The final rule also included a capital conservation buffer which was phased in over a five-year period until it reached 2.5% on January 1, 2019.

Dividends paid by the Bank are the primary source of funds available to the Company. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory authorities.

Quantitative measures established by regulation to ensure capital adequacy requires the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 risk-based capital (as defined) to average assets and risk-weighted assets (as defined). Management believes, as of December 31, 2023 and 2022, that the Bank met all capital adequacy requirements to which it was subject.

As of December 31, 2023 and 2022, the most recent notification from the OCC categorized the Bank as “well capitalized” under the OCC regulatory classification framework. To be categorized as “well capitalized,” the Bank must maintain minimum Total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The following tables present actual and required capital ratios for the the Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of December 31, 2023 and 2022. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.


	Actual				Minimum Capital Required – Basel III Fully Phased-In				To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2023
Company:
Tier 1 risk-based capital	$	312,454	11.49	%	$	231,087	8.50	%	N/A		N/A
Total risk-based capital	400,578		14.73		285,460		10.50		N/A		N/A
Tier 1 leverage capital	312,454		9.73		128,508		4.00		N/A		N/A

Bank:
Common equity Tier 1 capital	$	351,939	12.98	%	$	189,732	7.00	%	$	176,180	6.50	%
Tier 1 risk-based capital	351,939		12.98		230,389		8.50		216,837		8.00
Total risk-based capital	385,822		14.23		284,599		10.50		271,046		10.00
Tier 1 leverage capital	351,939		10.98		128,188		4.00		160,235		5.00


	Actual				Minimum Capital Required – Basel III Fully Phased-In				To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2022
Company:
Tier 1 risk-based capital	$	281,288	10.85	%	$	220,269	8.50	%	N/A		N/A
Total risk-based capital	366,243		14.13		272,096		10.50		N/A		N/A
Tier 1 leverage capital	281,288		9.12		123,428		4.00		N/A		N/A

Bank:
Common equity Tier 1 capital	$	321,245	12.43	%	$	180,892	7.00	%	$	167,971	6.50	%
Tier 1 risk-based capital	321,245		12.43		219,654		8.50		206,733		8.00
Total risk-based capital	352,187		13.63		271,337		10.50		258,417		10.00
Tier 1 leverage capital	321,245		10.43		123,150		4.00		153,937		5.00

- 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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