Regulatory Capital

6 Months Ended

Jun. 30, 2025

NOTE 10. Regulatory Capital

The Bank is subject to various regulatory capital 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 Consolidated Financial Statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s and consolidated Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

The minimum capital level requirements include: (i) a Tier 1 leverage ratio of 4%; (ii) common equity Tier 1 risk weighted capital ratio of 4.5%; (iii) a Tier 1 risk weighted capital ratio of 6%; and (iv) a total risk weighted capital ratio

of 8% for all institutions. The Bank is also required to maintain a “capital conservation buffer” of 2.5% above the regulatory minimum capital ratios which results in the following minimum ratios: (i) a common equity Tier 1 risk weighted capital ratio of 7.0%; (ii) a Tier 1 risk weighted capital ratio of 8.5%; and (iii) a total risk weighted capital ratio of 10.5%. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that could be utilized for such actions.

Under a policy of the Federal Reserve applicable to bank holding companies with consolidated assets of less than $3 billion, the Company is not subject to capital regulations.

The following table shows information regarding the Company’s and the Bank’s regulatory capital levels at June 30, 2025 and at December 31, 2024, as if the Company were subject to minimum capital requirements.


		Actual			Required for Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Regulations *
		Amount	Ratio		Amount		Ratio		Amount		Ratio

		(Dollars in thousands)
As of June 30, 2025
Total risk-based capital (to risk-weighted assets)
Company Consolidated	$	358,827	15.65	%	$	183,480	8.00	%	$	229,350	10.00	%
Bank		345,184	15.10			182,824	8.00			228,531	10.00
Common equity tier 1 (to risk-weighted assets)
Company Consolidated		320,145	13.96			103,208	4.50			149,078	6.50
Bank		316,603	13.85			102,839	4.50			148,545	6.50
Tier 1 capital (to risk-weighted assets)
Company Consolidated		330,145	14.39			137,610	6.00			183,480	8.00
Bank		316,603	13.85			137,118	6.00			182,824	8.00
Tier 1 capital (to average total assets)
Company Consolidated		330,145	12.50			105,604	4.00			132,006	5.00
Bank		316,603	12.04			105,212	4.00			131,515	5.00

As of December 31, 2024
Total risk-based capital (to risk-weighted assets)
Company Consolidated	$	332,700	15.62	%	$	170,364	8.00	%	$	212,955	10.00	%
Bank		324,763	15.37			169,013	8.00			211,266	10.00
Common equity tier 1 (to risk-weighted assets)
Company Consolidated		296,071	13.90			95,830	4.50			138,421	6.50
Bank		298,342	14.12			95,070	4.50			137,323	6.50
Tier 1 capital (to risk-weighted assets)
Company Consolidated		306,071	14.37			127,773	6.00			170,364	8.00
Bank		298,342	14.12			126,760	6.00			169,013	8.00
Tier 1 capital (to average total assets)
Company Consolidated		306,071	12.22			100,150	4.00			125,187	5.00
Bank		298,342	11.95			99,844	4.00			124,806	5.00

*Prompt Corrective Action requirements only apply to the Bank.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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