Capital Requirements

12 Months Ended

Dec. 31, 2021

Regulatory Capital Requirements [Abstract]

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.

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). In conjunction with the minimum capital requirements, the Bank is required to maintain a capital conservation buffer which is intended to absorb losses during periods of financial and economic stress. Failure to maintain the minimum ratios, inclusive of the buffer, will result in restrictions on capital distributions and other payments. This buffer was 2.5% for all periods presented and is applicable for all ratios with the exception of the tier 1 leverage ratio. The Bank's institution specific capital conservation buffer at December 31, 2021 was 3.30%. Management believes the Bank met all capital adequacy requirements to which it was subject at December 31, 2021 and 2020.

At December 31, 2021, 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, 2021 and 2020:

	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, 2021
Common Equity Tier 1 Capital to Risk Weighted Assets	$	107,570		10.44	%	$	46,362		4.50	%	$	66,967		6.50	%
Total Capital to Risk Weighted Assets		116,420		11.30	%		82,421		8.00	%		103,026		10.00	%
Tier 1 Capital to Risk Weighted Assets		107,570		10.44	%		61,816		6.00	%		82,421		8.00	%
Tier 1 Capital to Average Assets		107,570		8.84	%		48,654		4.00	%		60,817		5.00	%

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	%

- 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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