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Regulatory Capital Requirements
12 Months Ended
Dec. 31, 2022
Regulatory Capital Requirements [Abstract]  
Regulatory Capital Requirements

4. Regulatory Capital Requirements

Banks and 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.  The net unrealized gain or loss on available for sale securities is included in computing regulatory capital.  Management believes that, as of December 31, 2022, the Corporation and Bank met all capital adequacy requirements to which they are 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.  As of December 31, 2022, the most recent regulatory notification 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 Bank’s category.

The following table presents First United Bank & Trust’s capital ratios for years ended December 31, 2022 and 2021:

Actual

For Capital Adequacy
Purposes

To Be Well Capitalized
Under Prompt Corrective
Action Provisions

(in thousands)

    

Amount

    

Ratio

    

Amount

    

Ratio

    

Amount

    

Ratio

December 31, 2022

Total Capital (to risk-weighted assets)

196,442

14.37%

109,396

8.00%

136,745

10.00%

Tier 1 Capital (to risk-weighted assets)

181,673

13.29%

82,047

6.00%

109,396

8.00%

Common Equity Tier 1 Capital (to risk-weighted assets)

181,673

13.29%

61,535

4.50%

88,884

6.50%

Tier 1 Capital (to average assets)

181,673

10.01%

72,354

4.00%

90,443

5.00%

Actual

For Capital Adequacy
Purposes

To Be Well Capitalized
Under Prompt Corrective
Action Provisions

(in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

December 31, 2021

Total Capital (to risk-weighted assets)

187,029

14.97%

99,986

8.00%

124,983

10.00%

Tier 1 Capital (to risk-weighted assets)

171,404

13.72%

74,990

6.00%

99,986

8.00%

Common Equity Tier 1 Capital (to risk-weighted assets)

171,404

13.72%

56,242

4.50%

81,239

6.50%

Tier 1 Capital (to average assets)

171,404

10.00%

68,167

4.00%

85,209

5.00%

Federal and state banking regulations place certain restrictions on the amount of dividends paid and loans or advances made by the Bank to First United Corporation. The total amount of dividends that may be paid at any date is generally limited to the retained earnings of the Bank, and loans or advances are limited to 10% of the Bank’s capital stock and surplus on a secured basis. In addition, dividends paid by the Bank to First United Corporation would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements.