Regulatory Matters

9 Months Ended

Sep. 30, 2020

Regulatory Matters

Regulatory Matters

NOTE 17 Regulatory Matters

The Company and the Bank are subject to various regulatory capital requirements administered by the 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 consolidated financial statements.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of common equity tier 1, tier 1, and total capital (as defined in the regulations) to risk weighted assets (as defined) and of tier 1 capital (as defined) to average assets (as defined). Management believes at September 30, 2020 and December 31, 2019, each of the Company and the Bank had met all of the capital adequacy requirements to which it was subject.

The following table presents the Company’s and the Bank’s actual capital amounts and ratios as of September 30, 2020 and December 31, 2019:

	September 30, 2020
										Minimum to be
						Requirements				Well Capitalized
						for Capital				Under Prompt
	Actual				Adequacy Purposes				Corrective Action
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk weighted assets
Consolidated	$	270,679	13.08	%	$	93,151	4.50	%	$	N/A	N/A
Bank		257,835	12.47	%		93,076	4.50	%		134,443	6.50	%
Tier 1 capital to risk weighted assets										.
Consolidated		278,959	13.48	%		124,202	6.00	%		N/A	N/A
Bank		257,835	12.47	%		124,102	6.00	%		165,469	8.00	%
Total capital to risk weighted assets
Consolidated		354,573	17.13	%		165,603	8.00	%		N/A	N/A
Bank		283,758	13.72	%		165,469	8.00	%		206,836	10.00	%
Tier 1 capital to average assets
Consolidated		278,959	9.76	%		114,293	4.00	%		N/A	N/A
Bank		257,835	9.03	%		114,207	4.00	%		142,759	5.00	%

	December 31, 2019
										Minimum to be
						Requirements				Well Capitalized
						for Capital				Under Prompt
	Actual				Adequacy Purposes				Corrective Action
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk weighted assets
Consolidated	$	239,672	12.48	%	$	86,452	4.50	%	$	N/A	N/A
Bank		228,512	11.91	%		86,362	4.50	%		124,745	6.50	%
Tier 1 capital to risk weighted assets										.
Consolidated		247,866	12.90	%		115,270	6.00	%		N/A	N/A
Bank		228,512	11.91	%		115,149	6.00	%		153,532	8.00	%
Total capital to risk weighted assets
Consolidated		321,415	16.73	%		153,693	8.00	%		N/A	N/A
Bank		252,436	13.15	%		153,532	8.00	%		191,915	10.00	%
Tier 1 capital to average assets
Consolidated		247,866	11.05	%		91,504	4.00	%		N/A	N/A
Bank		228,512	10.20	%		89,615	4.00	%		112,018	5.00	%

The Bank is subject to certain restrictions on the amount of dividends that it may pay without prior regulatory approval. The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act rules. The rules included the implementation of a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount will be subject to the limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. At September 30, 2020, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. In addition, the Company must adhere to various U.S. Department of Housing and Urban Development, or HUD, regulatory guidelines including required minimum capital and liquidity to maintain their Federal Housing Administration approval status. Failure to comply with the HUD guidelines could result in withdrawal of this certification. As of September 30, 2020, and December 31, 2019, the Company was in compliance with HUD guidelines.