Regulatory Matters

3 Months Ended

Mar. 31, 2024

Note 5.

Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the OCC. Failure to meet the minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s 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 classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of common equity Tier I capital, Tier I capital and total capital to risk-weighted assets and Tier I capital to average assets. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel Ill rules) became fully effective for the Bank on January 1, 2019. Management believes, as of March 31, 2024 and December 31, 2023, that the Bank meets all capital adequacy requirements to which it is subject.

As of March 31, 2024 and December 31, 2023, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total ratios as disclosed in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s prompt corrective action category.

The Bank’s actual capital amounts and ratios as of March 31, 2024 and December 31, 2023 are also presented in the table below (dollar amounts in thousands):


									Required to Be Well-
					Required for				Capitalized Under
					Capital Adequacy				Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2024
Tier 1 Capital to Average Assets	$	83,639	17.04	%	$	19,634	4.00	%	$	24,542	5.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets		83,639	33.95			11,086	4.50			16,013	6.50
Tier 1 Capital to Risk-Weighted Assets		83,639	33.95			14,782	6.00			19,709	8.00
Total Capital to Risk-Weighted Assets		86,463	35.09			19,712	8.00			24,640	10.00

December 31, 2023
Tier 1 Capital to Average Assets	$	84,771	17.41	%	$	19,476	4.00	%	$	24,345	5.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets		84,771	34.15			11,170	4.50			16,135	6.50
Tier 1 Capital to Risk-Weighted Assets		84,771	34.15			14,894	6.00			19,859	8.00
Total Capital to Risk-Weighted Assets		87,698	35.33			19,858	8.00			24,823	10.00

- 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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