Regulatory Capital Matters

12 Months Ended

Dec. 31, 2021

Banking and Thrift, Other Disclosures [Abstract]

Regulatory Capital Matters

Regulatory Capital Matters

Banks and financial holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, for the Bank, prompt corrective action ("PCA") 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 result in regulatory enforcement actions. The net unrealized gain or loss on available for sale securities is excluded from computing regulatory capital. Management believes as of December 31, 2021 the Corporation and the Bank meet all capital adequacy requirements to which they are subject.

The PCA regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms alone do not 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; brokered deposits may not be accepted, renewed or rolled over; and capital restoration plans are required. As of December 31, 2021 and 2020, the most recent regulatory notifications categorized the Bank as well capitalized under the PCA. There are no events or conditions since this notification that management believes have changed the Bank’s capital category.

Actual and required capital amounts and ratios are presented below as of December 31, 2021 and 2020. The capital adequacy ratio includes the capital conservation buffer.

	Actual				For Capital Adequacy Purposes (1)				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2021
Total Capital to Risk Weighted Assets
Consolidated	$	541,651	14.92	%	$	381,093	10.50	%	N/A
Bank	$	475,231	13.16	%	$	379,180	10.50	%	$	361,123	10.00	%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated	$	427,988	11.79	%	$	308,504	8.50	%	N/A
Bank	$	447,055	12.38	%	$	306,955	8.50	%	$	288,899	8.00	%
Common equity Tier 1 to Risk Weighted Assets
Consolidated	$	350,203	9.65	%	$	254,062	7.00	%	N/A
Bank	$	439,676	12.18	%	$	252,786	7.00	%	$	234,730	6.50	%
Tier 1 (Core) Capital to Average Assets
Consolidated	$	427,988	8.22	%	$	208,208	4.00	%	N/A
Bank	$	447,055	8.63	%	$	207,109	4.00	%	$	258,887	5.00	%
December 31, 2020
Total Capital to Risk Weighted Assets
Consolidated	$	462,457	14.32	%	$	339,107	10.50	%	N/A
Bank	$	434,598	13.52	%	$	337,554	10.50	%	$	321,480	10.00	%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated	$	384,650	11.91	%	$	274,516	8.50	%	N/A
Bank	$	408,693	12.71	%	$	273,258	8.50	%	$	257,184	8.00	%
Common equity Tier 1 to Risk Weighted Assets
Consolidated	$	306,865	9.50	%	$	226,072	7.00	%	N/A
Bank	$	401,314	12.48	%	$	225,036	7.00	%	$	208,962	6.50	%
Tier 1 (Core) Capital to Average Assets
Consolidated	$	384,650	8.11	%	$	189,728	4.00	%	N/A
Bank	$	408,693	8.66	%	$	188,690	4.00	%	$	235,863	5.00	%

(1) The minimum amounts and ratios as of December 31, 2021 and 2020 include the full phase in of the capital conservation buffer of 2.5 percent required by the Basel III framework.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. During 2021, $134.6 million of accumulated net earnings of the Bank included in consolidated shareholders’ equity, plus any 2022 net profits retained to the date of the dividend declared, is available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements described above.