CAPITAL

9 Months Ended

Sep. 30, 2024

Capital

CAPITAL

NOTE 4 CAPITAL

Capital Requirements and Ratios

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action 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 initiate regulatory action.

To qualify as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3.0 billion or less. The primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain consolidated regulatory capital ratios; instead, regulatory capital ratios only apply at the subsidiary bank level.

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (BASEL III rules) became fully phased in on January 1, 2019. Under the BASEL III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer required is 2.50%. At September 30, 2024, the Bank had a capital conservation buffer of 8.90%. Amounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital. Management believes as of September 30, 2024, the Bank met all capital adequacy requirements to which it was subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to 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, and capital restoration plans are required. At September 30, 2024, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category.

The Bank’s actual capital amounts and ratios are presented in the following table as of September 30, 2024 and December 31, 2023, respectively.

	Actual					Minimum Capital Requirement					Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
September 30, 2024:
Total capital to risk weighted assets	$	103,270		16.90	%	$	48,877		8.00	%	$	61,097		10.00	%
Tier 1 capital to risk weighted assets		95,628		15.65	%		36,658		6.00	%		48,877		8.00	%
Tier 1 capital to average assets		95,628		10.84	%		35,278		4.00	%		44,098		5.00	%
Common equity Tier 1 capital
to risk weighted assets		95,628		15.65	%		27,494		4.50	%		39,713		6.50	%
December 31, 2023:
Total capital to risk weighted assets	$	99,246		16.58	%	$	47,873		8.00	%	$	59,842		10.00	%
Tier 1 capital to risk weighted assets		91,765		15.33	%		35,905		6.00	%		47,873		8.00	%
Tier 1 capital to average assets		91,765		11.11	%		33,040		4.00	%		41,300		5.00	%
Common equity Tier 1 capital
to risk weighted assets		91,765		15.33	%		26,929		4.50	%		38,897		6.50	%