Regulatory Capital Matters

12 Months Ended

Dec. 31, 2022

Banking and Thrift, Other Disclosure [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 AFS securities is excluded from computing regulatory capital. Management believes as of December 31, 2022 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, 2022 and 2021, 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, 2022 and 2021. 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, 2022
Total Capital to Risk Weighted Assets
Consolidated	$	688,164	16.08	%	$	449,370	10.50	%	N/A		N/A
Bank	525,048		12.32		447,436		10.50		$	426,130	10.00	%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated	566,454		13.24		363,776		8.50		N/A		N/A
Bank	489,374		11.48		362,210		8.50		340,904		8.00
Common equity Tier 1 to Risk Weighted Assets
Consolidated	488,669		11.42		299,580		7.00		N/A		N/A
Bank	481,995		11.31		298,291		7.00		276,984		6.50
Tier 1 (Core) Capital to Average Assets
Consolidated	566,454		10.74		210,988		4.00		N/A		N/A
Bank	489,374		9.22		212,283		4.00		265,354		5.00
December 31, 2021
Total Capital to Risk Weighted Assets
Consolidated	$	541,651	14.92	%	$	381,093	10.50	%	N/A		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		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		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		N/A
Bank	447,055		8.63		207,109		4.00		258,887		5.00

(1) The minimum amounts and ratios as of December 31, 2022 and 2021 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 2022, $248.2 million of accumulated net earnings of the Bank included in consolidated shareholders’ equity, plus any 2023 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.