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Regulatory Capital Requirements
 9 Months Ended
Sep. 30, 2025
Regulatory Capital Requirements
11.Regulatory Capital Requirements

 

Banks and bank holding companies, such as the Company, 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. Management believed that as of September 30, 2025 and December 31, 2024, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.

 

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.

 

Banking organizations are required to maintain minimum capital levels as follows: a ratio of common equity Tier 1 capital equal to 4.5% of risk-weighted assets , a ratio of Tier 1 capital equal to 6.0% of risk-weighted assets, a ratio of total capital equal to 8.0% of risk-weighted assets, and a leverage ratio of Tier 1 capital to total quarterly average assets equal to 4.0% in all circumstances.

 

As of September 30, 2025 and December 31, 2024, the most recent regulatory notifications categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

 

Regulations include a capital conservation buffer of 2.5% that is added to these minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including the amount of dividends that it may pay without prior regulatory approval, stock repurchases and certain discretionary bonus payments to executive officers. At September 30, 2025 and December 31, 2024, the ratios for the Company and the Bank were sufficient to meet the conservation buffer.

 

 

The following is a comparison of the Company’s regulatory capital ratios to minimum capital ratio requirements as of September 30, 2025 and December 31, 2024:

  

(Dollars in thousands)            
           For capital 
   Actual   adequacy purposes 
   Amount   Ratio   Amount   Ratio (1) 
As of September 30, 2025                
Leverage  $150,556    9.44%  $63,762    4.0%
Common Equity Tier 1 Capital   129,556    11.13%   81,466    7.0%
Tier 1 Capital   150,556    12.94%   98,923    8.5%
Total Risk Based Capital   162,795    13.99%   122,199    10.5%
                     
As of December 31, 2024                    
Leverage  $139,657    9.02%  $61,964    4.0%
Common Equity Tier 1 Capital   118,657    10.49%   79,164    7.0%
Tier 1 Capital   139,657    12.35%   96,128    8.5%
Total Risk Based Capital   152,121    13.45%   118,746    10.5%

 

(1)The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

 

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements as of September 30, 2025 and December 31, 2024:

   

                   To be well-capitalized 
                   under prompt 
(Dollars in thousands)      For capital   corrective 
   Actual   adequacy purposes   action provisions 
   Amount   Ratio   Amount   Ratio (1)   Amount   Ratio 
As of September 30, 2025                        
Leverage  $149,409    9.40%  $63,566    4.0%  $79,457    5.0%
Common Equity Tier 1 Capital   149,409    12.84%   81,466    7.0%   75,647    6.5%
Tier 1 Capital   149,409    12.84%   98,923    8.5%   93,104    8.0%
Total Risk Based Capital   161,648    13.89%   122,199    10.5%   116,380    10.0%
                               
As of December 31, 2024                              
Leverage  $140,523    9.10%  $61,770    4.0%  $77,213    5.0%
Common Equity Tier 1 Capital   140,523    12.43%   79,146    7.0%   73,493    6.5%
Tier 1 Capital   140,523    12.43%   96,106    8.5%   99,453    8.0%
Total Risk Based Capital   152,987    13.53%   118,719    10.5%   113,066    10.0%

 

(1)The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.