Note 9 - REGULATORY CAPITAL REQUIREMENTS

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

REGULATORY CAPITAL REQUIREMENTS

NOTE 9 – 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 March 31, 2023 and December 31, 2022, 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 March 31, 2023 and

December 31, 2022 are presented in the following tables (dollars in thousands).  As of March 31, 2023 and December 31, 2022, 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 March 31, 2023:
Company:
Total risk-based capital	$	1,078,343	14.68	%	$	587,728	>	8.00	%	$	771,392	>	10.50	%	$	734,659	>	10.00	%
Tier 1 risk-based capital		754,221	10.27			440,796	>	6.00			624,460	>	8.50			587,728	>	8.00
Tier 1 leverage		754,221	9.73			310,214	>	4.00			310,214	>	4.00			387,768	>	5.00
Common equity Tier 1		705,587	9.60			330,597	>	4.50			514,262	>	7.00			477,529	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	282,911	13.15	%	$	172,050	>	8.00	%	$	225,816	>	10.50	%	$	215,063	>	10.00	%
Tier 1 risk-based capital		256,016	11.90			129,038	>	6.00			182,804	>	8.50			172,050	>	8.00
Tier 1 leverage		256,016	11.06			92,599	>	4.00			92,599	>	4.00			115,748	>	5.00
Common equity Tier 1		256,016	11.90			96,778	>	4.50			150,544	>	7.00			139,791	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	323,605	16.24	%	$	159,422	>	8.00	%	$	209,241	>	10.50	%	$	199,277	>	10.00	%
Tier 1 risk-based capital		298,757	14.99			119,566	>	6.00			169,386	>	8.50			159,422	>	8.00
Tier 1 leverage		298,757	13.95			85,658	>	4.00			85,658	>	4.00			107,073	>	5.00
Common equity Tier 1		298,757	14.99			89,675	>	4.50			139,494	>	7.00			129,530	>	6.50
Community State Bank:
Total risk-based capital	$	147,754	12.53	%	$	94,349	>	8.00	%	$	123,833	>	10.50	%	$	117,936	>	10.00	%
Tier 1 risk-based capital		133,007	11.28			70,762	>	6.00			100,246	>	8.50			94,349	>	8.00
Tier 1 leverage		133,007	10.45			50,899	>	4.00			50,899	>	4.00			63,624	>	5.00
Common equity Tier 1		133,007	11.28			53,071	>	4.50			82,555	>	7.00			76,659	>	6.50
Guaranty Bank:
Total risk-based capital	$	246,979	12.41	%	$	159,267	>	8.00	%	$	209,038	>	10.50	%	$	199,084	>	10.00	%
Tier 1 risk-based capital		223,668	11.23			119,450	>	6.00			169,221	>	8.50			159,267	>	8.00
Tier 1 leverage		223,668	11.02			81,171	>	4.00			81,171	>	4.00			101,464	>	5.00
Common equity Tier 1		223,668	11.23			89,588	>	4.50			139,359	>	7.00			129,404	>	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, 2022:
Company:
Total risk-based capital	$	1,055,177	14.28	%	$	591,132	>	8.00	%	$	775,861	>	10.50	%	$	738,915	>	10.00	%
Tier 1 risk-based capital		734,977	9.95			443,349	>	6.00			628,078	>	8.50			591,132	>	8.00
Tier 1 leverage		734,977	9.61			305,959	>	4.00			305,959	>	4.00			382,449	>	5.00
Common equity Tier 1		686,375	9.29			332,512	>	4.50			517,241	>	7.00			480,295	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	275,337	13.07	%	$	168,588	>	8.00	%	$	221,272	>	10.50	%	$	210,735	>	10.00	%
Tier 1 risk-based capital		248,978	11.81			126,441	>	6.00			179,125	>	8.50			168,588	>	8.00
Tier 1 leverage		248,978	11.01			90,419	>	4.00			90,419	>	4.00			133,023	>	5.00
Common equity Tier 1		248,978	11.81			94,831	>	4.50			147,514	>	7.00			136,978	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	308,153	14.84	%	$	166,168	>	8.00	%	$	218,096	>	10.50	%	$	207,711	>	10.00	%
Tier 1 risk-based capital		282,258	13.59			124,626	>	6.00			176,554	>	8.50			166,168	>	8.00
Tier 1 leverage		282,258	13.17			85,707	>	4.00			85,707	>	4.00			107,134	>	5.00
Common equity Tier 1		282,258	13.59			93,470	>	4.50			145,397	>	7.00			135,012	>	6.50
Community State Bank:
Total risk-based capital	$	142,974	12.04	%	$	94,981	>	8.00	%	$	124,662	>	10.50	%	$	118,726	>	10.00	%
Tier 1 risk-based capital		128,130	10.79			71,236	>	6.00			100,917	>	8.50			94,981	>	8.00
Tier 1 leverage		128,130	10.09			50,799	>	4.00			50,799	>	4.00			63,499	>	5.00
Common equity Tier 1		128,130	10.79			53,427	>	4.50			83,108	>	7.00			77,172	>	6.50
Guaranty Bank:
Total risk-based capital	$	243,106	12.24	%	$	158,903	>	8.00	%	$	208,560	>	10.50	%	$	198,629	>	10.00	%
Tier 1 risk-based capital		218,647	11.01			119,177	>	6.00			168,834	>	8.50			158,903	>	8.00
Tier 1 leverage		218,647	10.90			80,229	>	4.00			80,229	>	4.00			100,286	>	5.00
Common equity Tier 1		218,647	11.01			89,383	>	4.50			139,040	>	7.00			129,109	>	6.50