REGULATORY CAPITAL MATTERS

12 Months Ended

Dec. 31, 2023

REGULATORY CAPITAL MATTERS

REGULATORY CAPITAL MATTERS

25. REGULATORY CAPITAL MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital requirements that involve quantitative measures of the Company’s and Bank’s assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications also are subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, tier 1, and common equity tier 1 capital to risk-weighted assets and of tier 1 capital to average assets. Tier 1 capital, risk-weighted assets and average assets are as defined by regulation. The required

minimums for the Company and Bank are set forth in the tables that follow. The Company and the Bank met all capital adequacy requirements at December 31, 2023 and 2022.

Under the Basel III Capital Rules the Company and the Bank are subject to the following minimum capital to risk-weighted assets ratios: a) 4.5% based on common equity tier 1 capital ("CET1"); b) 6.0% based on tier 1 capital; and c) 8.0% based on total regulatory capital. A minimum leverage ratio (tier 1 capital as a percentage of total average assets) of 4.0% is also required under the Basel III Capital Rules. The Basel III Capital Rules additionally require institutions to retain a capital conservation buffer, composed of CET1, of 2.5% above these required minimum capital ratio levels. Including the capital conservation buffer, the Company and the Bank effectively have the following minimum capital to risk-weighted assets ratios: a) 7.0% based on CET1; b) 8.5% based on tier 1 capital; and c) 10.5% based on total regulatory capital.

The Company and the Bank made the one-time, permanent election to continue to exclude the effects of accumulated other comprehensive income or loss items included in stockholders’ equity for the purposes of determining the regulatory capital ratios.

As of December 31, 2023, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, tier 1 risk-based, common equity tier 1 risk-based, and tier 1 leverage ratios as set forth in the tables below. Since that notification, there are no conditions or events that management believes have changed the institution’s category.

The following tables present actual capital levels and minimum required levels for the Company and the Bank under Basel III rules at December 31, 2023 and 2022:

	At December 31, 2023
					For Capital				To Be Categorized
	Actual				Adequacy Purposes(1)				as “Well Capitalized”(1)
							Minimum				Minimum
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 capital / % of average total assets
Bank	$	1,331,676	9.8	%	$	544,254	4.0	%	$	680,318	5.0	%
Consolidated Company		1,158,455	8.5			544,529	4.0			N/A	N/A
Common equity Tier 1 capital / % of risk-weighted assets
Bank		1,331,676	12.6			476,168	4.5			687,798	6.5
Consolidated Company		1,041,886	9.8			476,341	4.5			N/A	N/A
Tier 1 capital / % of risk-weighted assets
Bank		1,331,676	12.6			634,890	6.0			846,520	8.0
Consolidated Company		1,158,455	10.9			635,122	6.0			N/A	N/A
Total capital / % of risk-weighted assets
Bank		1,406,581	13.3			846,520	8.0			1,058,151	10.0
Consolidated Company		1,433,361	13.5			846,829	8.0			N/A	N/A

(1) In accordance with the Basel III rules.

	At December 31, 2022
					For Capital				To Be Categorized
	Actual				Adequacy Purposes(1)				as “Well Capitalized”(1)
							Minimum				Minimum
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 capital / % of average total assets
Bank	$	1,286,656	10.0	%	$	517,606	4.0	%	$	647,008	5.0	%
Consolidated Company		1,103,498	8.5			517,914	4.0			N/A	N/A
Common equity Tier 1 capital / % of risk-weighted assets
Bank		1,286,656	11.9			485,062	4.5			700,645	6.5
Consolidated Company		986,928	9.2			485,243	4.5			N/A	N/A
Tier 1 capital / % of risk-weighted assets
Bank		1,286,656	11.9			646,749	6.0			862,332	8.0
Consolidated Company		1,103,498	10.2			646,990	6.0			N/A	N/A
Total capital / % of risk-weighted assets
Bank		1,373,431	12.7			862,332	8.0			1,077,915	10.0
Consolidated Company		1,390,272	12.9			862,654	8.0			N/A	N/A

(1) In accordance with the Basel III rules.