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Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2023
Regulatory Capital Requirements under Banking Regulations [Abstract]  
Regulatory Capital Requirements REGULATORY CAPITAL REQUIREMENTS
Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. 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 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 Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification 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 Company and Bank to maintain amounts and ratios (set forth in the table below) of Common Equity Tier 1, Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (leverage ratio). As of December 31, 2023 and December 31, 2022, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.
As of December 31, 2023, the most recent notification from our primary regulator categorized Shore United Bank, N.A., as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes would change the Bank’s classification. To be categorized as well capitalized, the Bank must maintain minimum common equity Tier 1, Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios, which are described below.
The minimum ratios for capital adequacy purposes require a common equity Tier 1 capital to risk-weighted assets ratio of 4.5%, a ratio of Tier 1 capital to risk-weighted assets of 6.0%, a ratio of Total Capital to risk-weighted assets of 8.0%, and a Tier 1 leverage ratio of 4.0%. A capital conservation buffer is also established above the regulatory minimum capital requirements of 2.50% for all regulatory risk-weighted ratios. To be categorized as well capitalized, a bank must maintain minimum ratios of 6.50%, 8.00%, 10.00% and 5.00% for its common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively.
The following tables present the capital amounts and ratios at December 31, 2023 and December 31, 2022.
Regulatory Capital and Ratios
Regulatory Minimum Ratio + Capital Conversation Buffer ( 1)
The CompanyThe Bank
(dollars in thousands)2023202220232022
Common equity$511,135 $364,285 $570,100 $395,594 
Goodwill(63,266)(63,266)(63,266)(63,266)
Core deposit intangible (2)
(38,069)(5,547)(38,069)(5,547)
DTAs that arise from net operating loss and tax credit carry forwards(8,977)— (6,059)— 
AOCI (gains) losses7,494 9,021 7,494 9,021 
Common Equity Tier 1 Capital408,317 304,493 470,200 335,802 
TRUPs29,158 18,398 — — 
Tier 1 Capital437,475 322,891 470,200 335,802 
Allowable reserve for credit losses and other Tier 2 adjustments58,586 16,854 58,586 16,854 
Subordinated notes43,139 24,674 — — 
Total Capital539,200 364,419 528,786 352,656 
Risk-Weighted Assets ("RWA")4,697,504 2,619,400 4,693,009 2,618,939 
Average Assets ("AA")5,649,116 3,390,516 5,644,930 3,386,771 
Common Tier 1 Capital to RWA7.00%8.69 %11.62 %10.02 %12.82 %
Tier 1 Capital to RWA8.50%9.31 %12.33 %10.02 %12.82 %
Total Capital to RWA10.50%11.48 %13.91 %11.27 %13.47 %
Tier 1 Capital to AA (Leverage) (3)
n/a7.74 %9.52 %8.33 %9.92 %
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(1)The regulatory minimum capital ratio + the capital conservation buffer .
(2)Core deposit intangible at December 31, 2023 is net of deferred tax liability.
(3)Tier 1 Capital to AA (Leverage) has no capital conservation buffer defined. The PCA well capitalized is defined as 5.00%
Bank and holding company regulations impose certain restrictions on dividend payments by the Bank, as well as restricting extensions of credit and transfers of assets between the Bank and the Company.
At December 31, 2023, the Bank could pay dividends to the parent to the extent of its earnings so long as it maintained required capital ratios.