XML 38 R24.htm IDEA: XBRL DOCUMENT v3.21.1
Capital Requirements
 12 Months Ended
Dec. 31, 2020
Regulatory Capital Requirements [Abstract]  
Capital Requirements

NOTE 15. Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the 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 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 their 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.

Effective January 1, 2015, the Federal Reserve issued a final rule that made technical changes to its market risk capital rules to align them with the BASEL III regulatory capital framework and meet certain requirements of the Dodd-Frank Act.  The phase-in period for the final rules began January 1, 2015 with full compliance with the final rules phased in by January 1, 2019.  As a part of this final rule, the Bank was required to begin calculating and disclosing Common Equity Tier 1 Capital to risk weighted assets in 2015. In addition to the minimum regulatory capital required for capital adequacy purposes, the Bank is required to maintain a minimum Capital Conservation Buffer, in the form of common equity, in order to avoid restrictions on capital distributions and discretionary bonuses. The required amount of the Capital Conservation Buffer was 0.625% on January 1, 2016 and has increased by 0.625% each year until it reached 2.5% on January 1, 2019. The Capital Conservation Buffer is applicable to all ratios except the leverage ratio, which is noted below as Tier 1 Capital to Average Assets. The Bank's institution specific capital conservation buffer at December 31, 2020 was 5.29%.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital, and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes the Bank met all capital adequacy requirements to which it was subject at December 31, 2020 and 2019.

At December 31, 2020, the most recent notification from the Federal Reserve categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution 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 tables. There are no conditions or events since the notification that management believes have changed the Bank’s category.

The following table presents the Bank’s actual capital amounts and ratios at December 31, 2020 and 2019:

 

 

 

Actual

 

 

Minimum Capital

Requirement

 

 

Minimum To Be

Well Capitalized

Under Prompt

Corrective Action

Provisions

 

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

 

(dollars in thousands)

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital to Risk Weighted Assets

 

$

97,825

 

 

 

12.39

%

 

$

35,540

 

 

 

4.50

%

 

$

51,335

 

 

 

6.50

%

Total Capital to Risk Weighted Assets

 

 

104,957

 

 

 

13.29

%

 

 

63,182

 

 

 

8.00

%

 

 

78,977

 

 

 

10.00

%

Tier 1 Capital to Risk Weighted Assets

 

 

97,825

 

 

 

12.39

%

 

 

47,386

 

 

 

6.00

%

 

 

63,182

 

 

 

8.00

%

Tier 1 Capital to Average Assets

 

 

97,825

 

 

 

9.06

%

 

 

43,213

 

 

 

4.00

%

 

 

54,016

 

 

 

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital to Risk Weighted Assets

 

$

90,775

 

 

 

13.65

%

 

$

29,931

 

 

 

4.50

%

 

$

43,234

 

 

 

6.50

%

Total Capital to Risk Weighted Assets

 

 

95,772

 

 

 

14.40

%

 

 

53,211

 

 

 

8.00

%

 

 

66,514

 

 

 

10.00

%

Tier 1 Capital to Risk Weighted Assets

 

 

90,775

 

 

 

13.65

%

 

 

39,908

 

 

 

6.00

%

 

 

53,211

 

 

 

8.00

%

Tier 1 Capital to Average Assets

 

 

90,775

 

 

 

10.61

%

 

 

34,216

 

 

 

4.00

%

 

 

42,770

 

 

 

5.00

%