Regulatory Capital

9 Months Ended

Sep. 30, 2022

Regulatory Capital

Regulatory Capital

Note 11: Regulatory Capital

The Company and the Bank are subject to various regulatory requirements administered by 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’s financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank must also meet certain specific capital guidelines under the regulatory framework for prompt corrective action. The capital amounts and classifications 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 Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets (referred to as the “leverage ratio”), as defined under the applicable regulatory capital rules.

The following tables present the capital amounts and ratios for the Company, on a consolidated basis, and the Bank as of September 30, 2022 and December 31, 2021:

					Minimum Required				For Capital Adequacy				To be Well Capitalized
					For Capital Adequacy				Purposes Plus Capital				Under Prompt Corrective
	Actual				Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2022
Company (Consolidated):
Total Risk-based Capital	$	535,184	13.78	%	$	310,810	8.00	%	$	407,939	10.50	%		N/A	N/A
Tier 1 Risk-based Capital		395,765	10.19			233,108	6.00			330,236	8.50			N/A	N/A
Common Equity Tier 1 Capital		329,251	8.47			174,831	4.50			271,959	7.00			N/A	N/A
Tier 1 Leverage Ratio		395,765	9.98			158,647	4.00			158,647	4.00			N/A	N/A
Bank:
Total Risk-based Capital	$	491,982	12.67	%	$	310,689	8.00	%	$	407,779	10.50	%	$	388,361	10.00	%
Tier 1 Risk-based Capital		445,131	11.46			233,017	6.00			330,107	8.50			310,689	8.00
Common Equity Tier 1 Capital		445,131	11.46			174,762	4.50			271,853	7.00			252,435	6.50
Tier 1 Leverage Ratio		445,131	11.24			158,453	4.00			158,453	4.00			198,067	5.00

					Minimum Required				For Capital Adequacy				To be Well Capitalized
					For Capital Adequacy				Purposes Plus Capital				Under Prompt Corrective
	Actual				Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2021
Company (Consolidated):
Total Risk-based Capital	$	499,554	15.55	%	$	256,966	8.00	%	$	337,268	10.50	%		N/A	N/A
Tier 1 Risk-based Capital		367,161	11.43			192,725	6.00			273,027	8.50			N/A	N/A
Common Equity Tier 1 Capital		300,647	9.36			144,543	4.50			224,845	7.00			N/A	N/A
Tier 1 Leverage Ratio		367,161	10.82			135,723	4.00			135,723	4.00			N/A	N/A
Bank:
Total Risk-based Capital	$	415,848	12.94	%	$	257,005	8.00	%	$	337,319	10.50	%	$	321,256	10.00	%
Tier 1 Risk-based Capital		375,688	11.69			192,754	6.00			273,068	8.50			257,005	8.00
Common Equity Tier 1 Capital		375,688	11.69			144,565	4.50			224,879	7.00			208,816	6.50
Tier 1 Leverage Ratio		375,688	11.09			135,508	4.00			135,508	4.00			169,386	5.00

The Company and the Bank must maintain a capital conservation buffer, as defined by regulatory guidelines, in order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers.