REGULATORY CAPITAL REQUIREMENTS

6 Months Ended

Mar. 31, 2024

REGULATORY CAPITAL REQUIREMENTS.

REGULATORY CAPITAL REQUIREMENTS

NOTE 9: REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can trigger certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated 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 Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

U.S. Basel III Capital Rules

In July 2013, the Federal Reserve Board approved final rules (the “U.S. Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations and implementing the Basel Committee on Banking Supervision’s December 2010 framework for strengthening international capital standards. The U.S. Basel III Capital Rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions.

The minimum regulatory capital requirements established by the U.S. Basel III Capital Rules became effective for the Bank on January 1, 2016 and become fully phased in on January 1, 2019. The U.S. Basel III Capital Rules require the Bank to:

● Meet a minimum Common Equity Tier 1 Capital ratio of 4.50% of risk-weighted assets and a minimum Tier 1 Capital of 6.00% of risk-weighted assets;

● Continue to require a minimum Total Capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 Leverage Capital ratio of 4.00% of average assets;

● Maintain a “capital conservation buffer” of 2.50% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus payments; and

● Comply with a revised definition of capital to improve the ability of regulatory capital instruments to absorb losses. Certain non-qualifying capital instruments, including cumulative preferred stock and TruPS, will be excluded as a component of Tier 1 capital for institutions of the Company’s size.

The U.S. Basel III Capital Rules use a standardized approach for risk weightings that expand the risk- weightings for assets and off-balance sheet exposures from the previous 0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and off- balance sheet exposures, resulting in higher risk weights for a variety of asset categories.

The capital conservation buffer at March 31, 2024 and September 30, 2023 is 2.50%. The Bank exceeded these “well-capitalized” and “capital conservation buffer” ratios for all periods presented.

As of March 31, 2024 and September 30, 2023, the Bank’s capital levels meet the fully phased-in minimum capital requirements, including the new capital conservation buffers, as prescribed in the U.S. Basel III Capital Rules.

As of March 31, 2024 and September 30, 2023, the most recent notification from Federal Deposit Insurance Corporation (“FDIC”) categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category.

There are no comparable minimum capital requirements that apply to the Company as a savings and loan holding company. The Bank’s actual and required capital amounts and ratios are presented in the table below:

										Minimum to be Well
										Capitalized Under Prompt
					Minimum Capital					Corrective Action
	Actual				Requirement					Provisions
	Amount ($)		Ratio (%)		Amount ($)			Ratio (%)		Amount ($)			Ratio (%)
	(In Thousands)
As of March 31, 2024 (unaudited)
Total Capital (to Risk-Weighted Assets)	$	26,191	23.7	≥	$	8,826	≥	8.0	≥	$	11,033	≥	10.0
Tier 1 Capital (to Risk-Weighted Assets)		25,098	22.7	≥		6,620	≥	6.0	≥		8,826	≥	8.0
Tier 1 Common Equity (to Risk-Weighted Assets)		25,098	22.7	≥		4,965	≥	4.5	≥		7,171	≥	6.5
Tier 1 Leverage Ratio (to Adjusted Total Assets)		25,098	12.5	≥		8,024	≥	4.0	≥		10,031	≥	5.0
Capital Conservation Buffer on Tier 1 Common Equity		26,191	15.7	≥		7,723	≥	7.0	≥		N/A	≥	N/A
As of September 30, 2023
Total Capital (to Risk-Weighted Assets)	$	21,906	19.4	≥	$	9,020	≥	8.0	≥	$	11,275	≥	10.0
Tier 1 Capital (to Risk-Weighted Assets)		21,283	18.9	≥		6,765	≥	6.0	≥		9,019	≥	8.0
Tier 1 Common Equity (to Risk-Weighted Assets)		21,283	18.9	≥		5,074	≥	4.5	≥		7,329	≥	6.5
Tier 1 Leverage Ratio (to Adjusted Total Assets)		21,283	10.6	≥		8,022	≥	4.0	≥		10,027	≥	5.0
Capital Conservation Buffer on Tier 1 Common Equity		21,906	11.4	≥		7,892	≥	7.0	≥		N/A	≥	N/A

GS&L Municipal Bank’s actual and required capital amounts and ratios are as follows:

										Minimum to be Well
										Capitalized Under Prompt
					Minimum Capital					Corrective Action
	Actual				Requirement					Provisions
	Amount ($)		Ratio (%)		Amount ($)			Ratio (%)		Amount ($)			Ratio (%)
	(In Thousands)
As of March 31, 2024 (unaudited)
Total Capital (to Risk-Weighted Assets)	$	13,494	120.4	≥	$	896	≥	8.0	≥	$	1,120	≥	10.0
Tier 1 Capital (to Risk-Weighted Assets)		13,494	120.4	≥		672	≥	6.0	≥		896	≥	8.0
Tier 1 Common Equity (to Risk-Weighted Assets)		13,494	120.4	≥		504	≥	4.5	≥		728	≥	6.5
Tier 1 Leverage Ratio (to Adjusted Total Assets)		13,494	39.8	≥		1,357	≥	4.0	≥		1,697	≥	5.0
Capital Conservation Buffer on Tier 1 Common Equity		13,494	112.4	≥		784	≥	7.0	≥		N/A	≥	N/A
As of September 30, 2023
Total Capital (to Risk-Weighted Assets)	$	13,053	245.8	≥	$	425	≥	8.0	≥	$	531	≥	10.0
Tier 1 Capital (to Risk-Weighted Assets)		13,053	245.8	≥		319	≥	6.0	≥		425	≥	8.0
Tier 1 Common Equity (to Risk-Weighted Assets)		13,053	245.8	≥		239	≥	4.5	≥		345	≥	6.5
Tier 1 Leverage Ratio (to Adjusted Total Assets)		13,053	37.4	≥		1,394	≥	4.0	≥		1,743	≥	5.0
Capital Conservation Buffer on Tier 1 Common Equity		13,053	237.8	≥		372	≥	7.0	≥		N/A	≥	N/A