REGULATORY MATTERS

12 Months Ended

Dec. 31, 2023

REGULATORY MATTERS

REGULATORY MATTERS

NOTE 14 REGULATORY MATTERS

Banking regulators have established a uniform system to address the adequacy of capital for financial institutions.  The rules require minimum capital levels based on risk-adjusted assets.  Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material impact on the Bank’s 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.

Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer requirement is 2.50%. The Company’s capital conservation buffer for 2023 was 4.58% and for 2022 was 5.64%. The capital conservation buffer is designed to strengthen an institution’s financial resilience during economic cycles.  Financial institutions are required to maintain a minimum buffer as required by the Basel III final rules to avoid restrictions on capital distributions and other payments. 

The minimum capital amounts and ratios are defined in the regulations and the amounts are set forth in the table below (dollars in thousands).  The Bank has maintained capital levels far above the minimum requirements throughout the year, and as of December 31, 2023 and 2022, the Bank meets all capital adequacy requirements to which they are subject.

	Actual					Minimum Capital Requirement					Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based ratio	$	116,787		12.58	%	$	74,292		8.00	%	$	92,865		10.00	%
Tier 1 risk-based ratio		108,466		11.68	%		55,719		6.00	%		74,292		8.00	%
Common equity tier 1		108,466		11.68	%		41,789		4.50	%		60,362		6.50	%
Tier 1 leverage ratio		108,466		8.13	%		53,392		4.00	%		66,740		5.00	%

	Actual					Minimum Capital Requirement					Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2022	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based ratio	$	114,455		13.64	%	$	67,124		8.00	%	$	83,905		10.00	%
Tier 1 risk-based ratio		106,519		12.70	%		50,343		6.00	%		67,124		8.00	%
Common equity tier 1		106,519		12.70	%		37,757		4.50	%		54,538		6.50	%
Tier 1 leverage ratio		106,519		8.22	%		51,842		4.00	%		64,802		5.00	%