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Regulatory Capital
 12 Months Ended
Dec. 31, 2022
Regulatory Assets and Liabilities Disclosure [Abstract]  
Regulatory Capital REGULATORY CAPITAL
The Bank’s primary regulator is the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to regulation, supervision and regular examination by the Maryland Commissioner of Financial Regulation (the “Commissioner”) and the FDIC. The Company is subject to regulation, examination and supervision by the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended (the “BHCA”).
The Company and Bank are subject to the Basel III Capital Rules which establish a comprehensive capital framework for U.S. banking organizations. The rules implement the Basel Committee’s “Basel III” framework for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. The Basel III Capital Rules define the components of capital and address other issues affecting banking institutions’ regulatory capital ratios.
The rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, require a minimum ratio (“Min. Ratio”) of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer (“CCB”) is also established above the regulatory minimum capital requirements. The rules revised the definition and calculation of Tier 1 capital, Total Capital, and risk-weighted assets.
As of December 31, 2022, and 2021, the Company and Bank were well-capitalized under the regulatory framework for prompt corrective action under the new Basel III Capital Rules. Management believes, as of December 31, 2022 and 2021, that the Company and the Bank met all capital adequacy requirements. The Company’s and the Bank’s actual regulatory capital amounts and ratios are presented in the following table.
Regulatory Capital and Ratios
Regulatory Minimum Ratio + CCB(1)
The Company
The Bank
(dollars in thousands)December 31, 2022December 31, 2021December 31, 2022December 31, 2021
Common equity$187,011 $208,133 $216,408 $236,561 
Goodwill

(10,835)(10,835)(10,835)(10,835)
Core deposit intangible (net of deferred tax liability)(477)(766)(477)(766)
AOCI (gains) losses43,092 1,952 43,092 1,952 
Common Equity Tier 1 Capital

218,791 198,484 248,188 226,912 
TRUPs

12,000 12,000 — — 
Tier 1 Capital

230,791 210,484 248,188 226,912 
Allowable reserve for credit losses and other Tier 2 adjustments23,303 18,468 23,303 18,468 
Subordinated notes19,566 19,510 — — 
Tier 2 Capital

$273,660 $248,462 $271,491 $245,380 
Risk-Weighted Assets ("RWA")

$1,943,516 $1,665,296 $1,941,922 $1,663,831 
Average Assets ("AA")

$2,404,643 $2,281,210 $2,403,268 $2,279,835 


Common Tier 1 Capital to RWA
7.00%11.26 %11.92 %12.78 %13.64 %
Tier 1 Capital to RWA
8.5011.87 12.64 12.78 13.64 
Tier 2 Capital to RWA
10.5014.08 14.92 13.98 14.75 
Tier 1 Capital to AA (Leverage) (2)
n/a9.60 9.23 10.33 9.95 
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(1) The regulatory minimum capital ratio ("Min. Ratio") + the capital conservation buffer ("CCB").
(2) Tier 1 Capital to AA ("Leverage") has no capital conservation buffer defined. The prompt corrective action ("PCA") well capitalized is defined as 5.00%.
Dividends paid by the Company are substantially funded by dividends received from the Bank. Federal and holding company regulations, as well as Maryland law, imposes certain restrictions on capital distributions, including dividend payments and share repurchases. These restrictions generally require advance approval from the Bank's regulator for payment of dividends in excess of the sum of net income for the current calendar year and the retained net income of the prior two calendar years.