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CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS

6 Months Ended

Jun. 30, 2021

CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS

CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS

NOTE 5 CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (“OCC”). Failure to meet minimum regulatory 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’s financial statements. Under the regulatory 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 under the prompt corrective action guidelines are also subject to qualitative judgements by the regulators about components, risk weightings, and other factors.

NOTE 5 CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS (Continued)

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of: total risk-based capital, Tier 1 Capital to risk-weighted assets, and Tier 1 Capital to adjusted total assets. As discussed in greater detail below, as of June 30, 2021 and December 31, 2020, the Bank does meet all of the capital adequacy requirements to which it is subject.

At June 30, 2021 and December 31, 2020, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as adequately capitalized, the Bank would have to maintain minimum total risk-based, Tier 1 risk based, Tier 1 leverage ratios and Common Equity Tier 1 capital as disclosed in the table below. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category.


					To be Well Capitalized under the
	Actual				Prompt Corrective Action Provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio
As of June 30, 2021
Common Equity Tier 1 Capital	$	50,837	41.81	%	$	7,903	>6.5	%
Tier 1 Risk-Based Capital		50,837	41.81	%		9,727	>8.0	%
Total Risk-Based Capital		52,371	43.07	%		12,159	>10.0	%
Tier 1 Leverage Capital		50,837	21.34	%		11,911	>5.0	%
As of December 31, 2020
Common Equity Tier 1 Capital	$	50,426	40.92	%	$	8,010	>6.5	%
Tier 1 Risk-Based Capital		50,426	40.92	%		9,858	>8.0	%
Total Risk-Based Capital		52,118	42.29	%		12,323	>10.0	%
Tier 1 Leverage Capital		50,426	21.06	%		11,970	>5.0	%

- 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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