Regulatory Capital

6 Months Ended

Jun. 30, 2022

Regulatory Capital

Regulatory Capital

Note 2 — Regulatory Capital

The Company and the Bank are subject to regulatory capital requirements promulgated by the federal banking agencies. The Federal Reserve establishes capital requirements, including well capitalized standards, for the consolidated bank holding company, and the FDIC has similar requirements for the Company’s subsidiary bank. Prior to January 1,

2015, quantitative measures were established by regulation to ensure capital adequacy which required the Bank to maintain minimum amounts and ratios of Total, Tier 1 capital (as defined by regulations) to risk-weighted assets (as defined), and of Core tier 1 capital to adjusted total assets (as defined).

Effective January 1, 2015, the Company adopted the Basel III final rule. Based on the Company’s capital levels and statement of condition composition at December 31, 2021, the implementation of the new rule had no material impact on our regulatory capital level or ratios at the Bank level. The rule established limits at the Company level and increased the minimum Tier 1 capital to risk based assets requirement from 4% to 6% of risk-weighted assets; established a new common equity Tier 1 capital; and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rule has a capital conservation buffer requirement that was phased in at a rate of 0.625% annually beginning January 1, 2016 through January 1, 2020, when full capital conservation buffer requirement of 2.50% became effective. The Federal Reserve Board has provided a “small bank holding company” exception to its consolidated capital requirements, and legislation and the related issuance of regulations by the Federal Reserve Board has increased the threshold for the exception to $3.0 billion. As a result, the Company is not subject to the capital requirements until such time as its consolidated assets exceed $3.0 billion.

The Bank met all capital adequacy requirements to which it was subject as of June 30, 2022 and December 31, 2021.

The following table presents information about the Bank’s capital levels at the dates presented:

					Regulatory Capital Requirements
					Minimum Capital						For Classification as
	Actual				Adequacy(1)						Well-Capitalized
	Amount		Ratio		Amount			Ratio			Amount			Ratio
	(Dollars in Thousands)
As of June 30, 2022:
Total capital (to risk-weighted assets)	$	205,545	14.79	%	$	≥	111,212	≥	8.00	%	$	≥	139,016	≥	10.00	%
Tier 1 capital (to risk-weighted assets)		200,106	14.39			≥	83,409	≥	6.00			≥	111,212	≥	8.00
Common equity tier 1 capital (to risk-weighted assets)		200,106	14.39			≥	62,557	≥	4.50			≥	90,360	≥	6.50
Core (Tier 1) capital (to adjusted total assets)		200,106	16.62			≥	48,175	≥	4.00			≥	60,219	≥	5.00
As of December 31, 2021:
Total capital (to risk-weighted assets)	$	196,155	15.28	%	$	≥	102,702	≥	8.00	%	$	≥	128,377	≥	10.00	%
Tier 1 capital (to risk-weighted assets)		190,941	14.87			≥	77,026	≥	6.00			≥	102,702	≥	8.00
Common equity tier 1 capital (to risk-weighted assets)		190,941	14.87			≥	57,770	≥	4.50			≥	83,445	≥	6.50
Core (Tier 1) capital (to adjusted total assets)		190,941	16.79			≥	45,486	≥	4.00			≥	56,857	≥	5.00

(1) Ratios do not include the capital conservation buffer.

Based on the most recent notification by the FDIC, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. There have been no conditions or events that have occurred since notification that management believes have changed the Bank’s category.