Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2024

Regulatory Capital Requirements

(21) Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of December 31, 2024, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The Company and the Bank are subject to the Basel III Rule, which is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion).

The Basel III Rule includes a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, equal to 2.5% of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. The capital conservation buffer increases the common equity Tier 1 capital ratio, and Tier 1 capital and total risk-based capital ratios.

As of December 31, 2024 and December 31, 2023, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements in effect at December 31, 2024 and 2023:

(Dollars in thousands)
						For capital
	Actual					adequacy purposes
	Amount		Ratio			Amount		Ratio (1)
As of December 31, 2024
Leverage	$	139,657		9.02	%	$	61,964		4.0	%
Common Equity Tier 1 Capital		118,657		10.49	%		79,164		7.0	%
Tier 1 Capital		139,657		12.35	%		96,128		8.5	%
Total Risk-Based Capital		152,121		13.45	%		118,746		10.5	%
As of December 31, 2023
Leverage	$	130,625		8.41	%	$	62,116		4.0	%
Common Equity Tier 1 Capital		109,625		10.39	%		73,854		7.0	%
Tier 1 Capital		130,625		12.38	%		89,680		8.5	%
Total Risk-Based Capital		140,671		13.33	%		110,781		10.5	%

(1) The required percent for capital adequacy purposes includes a capital conservation buffer of 2.5%.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements in effect at December 31, 2024 and 2023:

(Dollars in thousands)											To be well-capitalized
						For capital					under regulatory
	Actual					adequacy purposes					guidelines
	Amount		Ratio			Amount		Ratio (1)			Amount		Ratio
As of December 31, 2024
Leverage	$	140,523		9.10	%	$	61,770		4.0	%	$	77,213		5.0	%
Common Equity Tier 1 Capital		140,523		12.43	%		79,146		7.0	%		73,493		6.5	%
Tier 1 Capital		140,523		12.43	%		96,106		8.5	%		90,453		8.0	%
Total Risk-Based Capital		152,987		13.53	%		118,719		10.5	%		113,066		10.0	%
As of December 31, 2023
Leverage	$	134,422		8.68	%	$	61,951		4.0	%	$	77,439		5.0	%
Common Equity Tier 1 Capital		134,422		12.74	%		73,833		7.0	%		68,560		6.5	%
Tier 1 Capital		134,422		12.74	%		89,655		8.5	%		84,381		8.0	%
Total Risk-Based Capital		144,468		13.70	%		110,750		10.5	%		105,476		10.0	%

(1) The required percent for capital adequacy purposes includes a capital conservation buffer of 2.5%.