REGULATORY MATTERS

9 Months Ended

Sep. 30, 2023

REGULATORY MATTERS

REGULATORY MATTERS

NOTE 11 – REGULATORY MATTERS

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 practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”), the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of September 30, 2023 the Company and Bank meet all capital adequacy requirements to which they are subject.

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. At September 30, 2023 and December 31, 2022, the most recent regulatory notifications 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 institution’s category.

The Company’s actual capital amounts (in thousands) and ratios are also presented in the following table:

								To Be Well Capitalized
					Minimum Capital Required -			Under Prompt Corrective
	Actual				Basel III			Action Provisions:
(Dollars in thousands)	Amount		Ratio		Amount ≥	Ratio ≥		Amount ≥	Ratio ≥
As of September 30, 2023:
Total Capital (to Risk Weighted Assets)
Consolidated	$	365,268	17.91	%	214,160	10.5	%	N/A	N/A
Bank		362,477	17.77	%	214,153	10.5		203,955	10.0	%
Tier I Capital (to Risk Weighted Assets)
Consolidated		347,314	17.03	%	173,368	8.5	%	N/A	N/A
Bank		344,523	16.89	%	173,362	8.5		163,164	8.0	%
Common Tier 1 (CET1)
Consolidated		347,314	17.03	%	142,773	7.0	%	N/A	N/A
Bank		344,523	16.89	%	142,769	7.0		132,571	6.5	%
Tier 1 Capital (to Average Assets)
Consolidated		347,314	10.07	%	137,909	4.0	%	N/A	N/A
Bank		344,523	9.99	%	137,901	4.0		172,376	5.0	%
As of December 31, 2022:
Total Capital (to Risk Weighted Assets)
Consolidated	$	338,185	16.68	%	212,932	10.5	%	N/A	N/A
Bank		336,866	16.61	%	212,915	10.5		202,777	10.0	%
Tier I Capital (to Risk Weighted Assets)
Consolidated		324,297	15.99	%	172,374	8.5	%	N/A	N/A
Bank		322,978	15.93	%	172,360	8.5		162,221	8.0	%
Common Tier 1 (CET1)
Consolidated		324,297	15.99	%	141,955	7.0	%	N/A	N/A
Bank		322,978	15.93	%	141,944	7.0		131,805	6.5	%
Tier 1 Capital (to Average Assets)
Consolidated		324,297	9.57	%	135,485	4.0	%	N/A	N/A
Bank		322,978	9.54	%	135,446	4.0		169,307	5.0	%