XML 48 R27.htm IDEA: XBRL DOCUMENT v3.25.1
Note 18 - Regulatory Matters
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Regulatory Capital Requirements under Banking Regulations [Text Block]

(18)

REGULATORY MATTERS

 

The Bank is subject to various regulatory capital requirements administered by the banking regulators.  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 Bank and the consolidated financial statements.  Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. Management believes that the Bank met all capital adequacy requirements to which it was subject as of December 31, 2024 and 2023.

 

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 notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the Bank’s category.

 

In 2019, the federal banking agencies jointly issued a final rule that provides for an optional, simplified measure of capital adequacy, the Community Bank Leverage Ratio (“CBLR”) framework, for qualifying community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The CBLR is the ratio of a bank’s tangible equity capital to average total consolidated assets.  A qualifying community bank that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under prompt corrective action statutes.  The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement.  The CBLR minimum requirement is 9%. An eligible banking organization is provided a two-quarter grace period to correct a ratio that falls below this required amount, provided the bank maintains a leverage ratio greater than 8%.  An eligible banking organization can elect to be subject to or opt out of the CBLR framework at any time.  As a qualified community bank, the Bank has opted into the CBLR framework as of December 31, 2024 and 2023.

 

The Bank’s actual capital amounts and ratios are presented in the following table.  No amounts were deducted from capital for interest-rate risk in either year.

 

                   

Minimum to be Well

  
                   

Capitalized under

  
                   

Prompt Corrective

  
   

Actual

    

Action Provisions:

  

(Dollars in thousands)

  

Amount

    

Ratio

    

Amount

    

Ratio

  
                                 

As of December 31, 2024:

                                

CBLR

   $ 126,402       10.57 %   $ 107,640       9.00 %
                                 

As of December 31, 2023:

                                

CBLR

   $ 116,765       9.92 %   $ 105,891       9.00 %