The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the 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 Company’s consolidated 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 the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the new rule established a new common equity Tier 1 minimum capital requirement (4.5 percent of risk-weighted assets), increased the minimum Tier 1 capital to risk-based assets requirement (from 4.0 percent to 6.0 percent of risk-weighted assets) and assigned a higher risk weight (150 percent) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain available-for-sale securities holdings and defined benefit plan obligations to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. The Bank exercised the opt-out election.

On September 17, 2019, the FDIC passed a final rule providing qualifying community banking organizations the ability to opt-in to a new community bank leverage ratio (“CBLR”) framework, (tier 1 capital to average consolidated assets) at 9.0 percent for institutions under $10.0 billion in assets that such institutions may elect to utilize in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized.

The Bank opted in to the community bank leverage ratio (tier 1 capital to average consolidated assets) (“CBLR”) framework, with a minimum requirement of 9% for institutions under $10 billion in assets. Such institutions meeting that requirement may elect to utilize the CBLR in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the CBLR and certain other qualifying criteria will automatically be deemed to be well-capitalized.

At December 31, 2023 and December 31, 2022, the Bank exceeded all of its regulatory capital requirements. The following table sets forth the regulatory capital ratios for the Bank as well as regulatory capital requirements for the periods presented.


					For Capital Adequacy				To be Well Capitalized under Prompt Corrective
	Actual					Purposes			Action Provisions

		Amount	Ratio			Amount	Ratio			Amount	Ratio
		(Dollars in Thousands)
As of December 31, 2023
Bank
Community Bank Leverage Ratio	$	350,749	9.09	%	$	308,608	8.00	%	$	347,184	9.00	%

As of December 31, 2022
Bank
Community Bank Leverage Ratio	$	327,806	9.86	%	$	265,557	8.00	%	$	298,752	9.00	%

The following table sets forth the regulatory capital ratios for the Company as well as the regulatory requirements for the year ended December 31, 2023.


					For Capital Adequacy				To be Well Capitalized under Prompt Corrective
	Actual					Purposes			Action Provisions

		Amount	Ratio			Amount	Ratio			Amount	Ratio
		(Dollars in Thousands)
As of December 31, 2023
Bancorp
Total Capital (to Risk-Weighted Assets)	$	379,562	11.14	%	$	272,564	8.00	%	$	340,705	10.00	%
Tier 1 Capital (to Risk-Weighted Assets)		319,154	9.37			204,422	6.00			272,563	8.00
C/E Tier 1 Capital (to Risk-Weighted Assets)		289,987	8.51			153,317	4.50			221,458	6.50
Tier 1 Capital (to adjusted total assets)		319,154	8.27			154,315	4.00			192,894	5.00

At December 31, 2022, the Company was not subject to the larger capital requirements set forth in the “Regulatory Relief Act”.

As of December 31, 2023 and 2022, the most recent notification from the Company and the Bank’s regulators categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events occurring since that notification that management believes have changed the Bank’s category.