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REGULATORY CAPITAL
 12 Months Ended
Sep. 30, 2023
Regulatory Capital [Abstract]  
REGULATORY CAPITAL

NOTE R - REGULATORY CAPITAL

 

The Company and Bank are required to maintain minimum amounts of capital to total “risk-weighted” assets, as defined by the banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s 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.

 

The “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act include a minimum common equity Tier 1 capital (“CET1”) to risk-weighted assets ratio of 4.5% of risk-weighted assets, a minimum Tier 1 capital to risk-weighted assets of 6.0% and a minimum leverage ratio of 4.0%. The required minimum ratio of total capital to risk-weighted assets is 8.0%. The regulatory banking rules also require a “capital conservation buffer” of 2.5% above the new regulatory minimum capital ratios, and resulted in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations established a maximum percentage of eligible retained income that could be utilized for such actions.

 

As of September 30, 2023, the most recent notification from the Federal Deposit Insurance Corporation 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.

 

The following tables set forth the Company’s and the Bank’s actual and required capital levels under those measures:

 

              To be well-
              capitalized under
           Required for capital  prompt corrective
At September 30, 2023  Company   Bank   adequacy purposes  action provisions
Tier 1 leverage ratio   12.12%    11.11%   ≥  4.00%  ≥   5.00%
CET1   16.33%    14.97%   ≥  7.00% (1)  ≥   6.50%
Tier 1 risk-based capital ratio   16.33%    14.97%   ≥  8.50% (1)  ≥   8.00%
Total risk-based capital ratio   17.58%    16.22%   ≥  10.50% (1)  ≥ 10.00%
                 
At September 30, 2022                
Tier 1 leverage ratio   12.57%    11.13%   ≥  4.00%  ≥   5.00%
CET1   17.16%    15.22%   ≥  7.00% (1)  ≥   6.50%
Tier 1 risk-based capital ratio   17.16%    15.22%   ≥  8.50% (1)  ≥   8.00%
Total risk-based capital ratio   18.41%    16.47%   ≥  10.50% (1)  ≥ 10.00%

 

(1) Includes 2.50% capital conservation buffer