CAPITAL MATTERS

12 Months Ended

Dec. 31, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Although these terms are not used to represent overall financial condition, if adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of December 31, 2024 and 2023, the most recent notifications from our regulatory agency categorized the Bank as “Well Capitalized” under the regulatory framework for Prompt Corrective Action. There are no conditions or events since these notifications that management believes have changed the Bank’s category.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2024 and 2023, respectively, are presented below:


	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
As of December 31, 2024
Total capital (to risk weighted assets)	$	225,432	15.6	%	$	115,755	> =	8.0	%	$	144,693	> =	10.0	%
Tier 1 capital (to risk weighted assets)	207,749		14.4	%	86,816		> =	6.0	%	115,755		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	207,749		14.4	%	65,112		> =	4.5	%	94,051		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	207,749		11.9	%	69,787		> =	4.0	%	87,234		> =	5.0	%
As of December 31, 2023
Total capital (to risk weighted assets)	$	228,092	14.6	%	$	124,883	> =	8.0	%	$	156,104	> =	10.0	%
Tier 1 capital (to risk weighted assets)	208,726		13.4	%	93,662		> =	6.0	%	124,883		> =	8.0	%
Common equity tier 1 capital (to risk weighted assets)	208,726		13.4	%	70,247		> =	4.5	%	101,468		> =	6.5	%
Tier 1 leverage ratio (to adjusted total assets)	208,726		11.5	%	72,479		> =	4.0	%	90,599		> =	5.0	%

The Company’s Tier 1 (leverage) and risk-based capital ratios at December 31, 2024 and 2023, respectively, are presented below:


	Actual				For Capital Adequacy Purposes
	Amount		Ratio		Amount			Ratio
As of December 31, 2024
Total capital (to risk weighted assets)	$	232,926	16.1	%	$	115,914	> =	8.0	%
Tier 1 capital (to risk weighted assets)	165,243		11.4	%	86,936		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	165,243		11.4	%	65,202		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	165,243		9.5	%	69,867		> =	4.0	%
As of December 31, 2023
Total capital (to risk weighted assets)	$	230,160	14.7	%	$	124,883	> =	8.0	%
Tier 1 capital (to risk weighted assets)	160,794		10.3	%	93,662		> =	6.0	%
Common equity tier 1 capital (to risk weighted assets)	160,794		10.3	%	70,247		> =	4.5	%
Tier 1 leverage ratio (to adjusted total assets)	160,794		8.9	%	72,479		> =	4.0	%

The Company is a legal entity separate and distinct from its banking subsidiary. As a bank holding company, the Company is subject to certain restrictions on its ability to pay dividends under applicable banking laws and regulations. Federal bank regulators are authorized to determine, under certain circumstances relating to the financial condition of a bank holding company or a bank, that the payment of dividends would be an unsafe or unsound practice, and to prohibit payment thereof. In particular, federal bank regulators have stated that paying dividends that deplete a banking organization’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings. In addition, in the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

The Company’s ability to pay dividends is also subject to the terms of its Subordinated Note Purchase Agreements dated August 27, 2020 and March 11, 2022, and Business Note Agreement dated June 26, 2019, which prohibits the Company from making dividend payments while an event of default has occurred and is continuing under the loan agreement or from allowing payment of a dividend which would create an event of default.

The following table reflects the annual cash dividend paid in the years ended December 31, 2024 and 2023, respectively.

December 31, 2024

December 31, 2023

Cash dividends per share

0.32

0.29

Stockholder record date

02/09/2024

02/03/2023

Dividend payment date

02/23/2024

02/17/2023

- 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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