Note 11 - REGULATORY CAPITAL REQUIREMENTS

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

REGULATORY CAPITAL REQUIREMENTS

NOTE 11 – REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. 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 effect on the Company and the subsidiary banks' financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain OBS items as calculated under regulatory accounting practices. The capital amounts and classification are also 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 subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets, each as defined by regulation.  Management believes, as of September 30, 2022 and December 31, 2021, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following tables. The Company and the subsidiary banks’ actual capital amounts and ratios as of September 30, 2022 and

December 31, 2021 are presented in the following tables (dollars in thousands).  As of September 30, 2022 and December 31, 2021, each of the subsidiary banks met such capital requirements to be “well capitalized”.

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of September 30, 2022:
Company:
Total risk-based capital	$	1,031,057	14.38	%	$	573,558	>	8.00	%	$	752,795	>	10.50	%	$	716,948	>	10.00	%
Tier 1 risk-based capital		708,601	9.88			430,169	>	6.00			609,406	>	8.50			573,558	>	8.00
Tier 1 leverage		708,601	9.56			296,423	>	4.00			296,423	>	4.00			370,528	>	5.00
Common equity Tier 1		660,033	9.21			322,627	>	4.50			501,864	>	7.00			466,016	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	267,060	12.98	%	$	164,649	>	8.00	%	$	216,101	>	10.50	%	$	205,811	>	10.00	%
Tier 1 risk-based capital		241,281	11.72			123,486	>	6.00			174,939	>	8.50			164,649	>	8.00
Tier 1 leverage		241,281	10.96			88,058	>	4.00			88,058	>	4.00			110,072	>	5.00
Common equity Tier 1		241,281	11.72			92,615	>	4.50			144,068	>	7.00			133,777	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	292,124	14.80	%	$	157,855	>	8.00	%	$	207,185	>	10.50	%	$	197,319	>	10.00	%
Tier 1 risk-based capital		267,441	13.55			118,391	>	6.00			167,721	>	8.50			157,855	>	8.00
Tier 1 leverage		267,441	13.20			81,049	>	4.00			81,049	>	4.00			101,312	>	5.00
Common equity Tier 1		267,441	13.55			88,794	>	4.50			138,123	>	7.00			128,257	>	6.50
Community State Bank:
Total risk-based capital	$	137,056	11.69	%	$	93,787	>	8.00	%	$	123,096	>	10.50	%	$	117,234	>	10.00	%
Tier 1 risk-based capital		122,387	10.44			70,341	>	6.00			99,649	>	8.50			93,787	>	8.00
Tier 1 leverage		122,387	9.90			49,457	>	4.00			49,457	>	4.00			61,821	>	5.00
Common equity Tier 1		122,387	10.44			52,755	>	4.50			82,064	>	7.00			76,202	>	6.50
Guaranty Bank:
Total risk-based capital	$	231,638	11.84	%	$	156,513	>	8.00	%	$	205,423	>	10.50	%	$	195,641	>	10.00	%
Tier 1 risk-based capital		207,174	10.59			117,385	>	6.00			166,295	>	8.50			156,513	>	8.00
Tier 1 leverage		207,174	10.56			78,491	>	4.00			78,491	>	4.00			98,113	>	5.00
Common equity Tier 1		207,174	10.59			88,039	>	4.50			136,949	>	7.00			127,167	>	6.50

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of December 31, 2021:
Company:
Total risk-based capital	$	814,629	14.77	%	$	441,100	>	8.00	%	$	578,944	>	10.50	%	$	551,375	>	10.00	%
Tier 1 risk-based capital		631,649	11.46			330,825	>	6.00			468,669	>	8.50			441,100	>	8.00
Tier 1 leverage		631,649	10.46			241,579	>	4.00			241,579	>	4.00			301,974	>	5.00
Common equity Tier 1		593,494	10.76			248,119	>	4.50			385,962	>	7.00			358,394	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	247,658	13.29	%	$	149,126	>	8.00	%	$	195,727	>	10.50	%	$	186,407	>	10.00	%
Tier 1 risk-based capital		224,253	12.03			111,844	>	6.00			158,446	>	8.50			149,126	>	8.00
Tier 1 leverage		224,253	10.45			85,873	>	4.00			85,873	>	4.00			107,341	>	5.00
Common equity Tier 1		224,253	12.03			83,883	>	4.50			130,485	>	7.00			121,164	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	277,673	14.85	%	$	149,595	>	8.00	%	$	196,343	>	10.50	%	$	186,993	>	10.00	%
Tier 1 risk-based capital		254,279	13.60			112,196	>	6.00			158,944	>	8.50			149,595	>	8.00
Tier 1 leverage		254,279	12.59			80,777	>	4.00			80,777	>	4.00			100,971	>	5.00
Common equity Tier 1		254,279	13.60			84,147	>	4.50			130,895	>	7.00			121,546	>	6.50
Community State Bank:
Total risk-based capital	$	123,365	11.95	%	$	82,601	>	8.00	%	$	108,413	>	10.50	%	$	103,251	>	10.00	%
Tier 1 risk-based capital		110,410	10.69			61,951	>	6.00			87,763	>	8.50			82,601	>	8.00
Tier 1 leverage		110,410	9.67			45,676	>	4.00			45,676	>	4.00			57,095	>	5.00
Common equity Tier 1		110,410	10.69			46,463	>	4.50			72,276	>	7.00			67,113	>	6.50
Guaranty Bank:
Total risk-based capital	$	101,067	13.39	%	$	60,369	>	8.00	%	$	79,235	>	10.50	%	$	75,462	>	10.00	%
Tier 1 risk-based capital		91,625	12.14			45,277	>	6.00			64,142	>	8.50			60,369	>	8.00
Tier 1 leverage		91,625	11.08			33,088	>	4.00			33,088	>	4.00			41,360	>	5.00
Common equity Tier 1		91,625	12.14			33,958	>	4.50			52,823	>	7.00			49,050	>	6.50