Note 6: Shareholders’ Equity

On October 26, 2023, the Company adopted a Repurchase Plan (the “Plan”) authorizing the repurchase of up to 750,000 shares of the Company’s stock. On August 20, 2025, the Board of Directors approved the renewal of the Plan. Stock repurchases under the Plan take place pursuant to a Rule 10b5-1 Plan with pricing and purchasing parameters established by management. The Plan may be suspended or discontinued at any time. There were no share repurchases under the Plan during the period ending March 31, 2026.

A summary of the activity under the repurchase plan is as follows:

The Company and Bank are subject to risk-based capital guidelines issued 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.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under GAAP, regulatory reporting requirements and regulatory capital standards.  The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.  Furthermore, the Company’s and the Bank’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier I, and Common Equity capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined).  Management believes, as of March 31, 2026, that the Company and Bank meet all capital adequacy requirements to which it is subject and maintains capital conservation buffers that allow the Company and Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to certain executive officers.

As of March 31, 2026, the most recent notification from the Federal Deposit Insurance Corporation (FDIC) categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, the Bank must maintain capital ratios as set forth in the table.  There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Company’s and Bank’s actual capital amounts and ratios are presented in the following table (dollars in thousands):

																										Minimum
																										To Be Well Capitalized
										Minimum								With Capital								Under Prompt
		Actual								Capital Requirements								Conservation Buffer								Corrective Action
		Amount				Ratio				Amount				Ratio				Amount				Ratio				Amount				Ratio
As of March 31, 2026
Total capital to risk-weighted assets
Company		$	270,494				15.96	%		$	135,614				8.00	%		$	177,993				10.50	%			N/A				N/A
Bank			270,454				15.96	%			135,533				8.00	%			177,887				10.50	%		$	169,416				10.00	%
Tier I capital to risk-weighted assets
Company			250,578				14.78	%			101,711				6.00	%			144,090				8.50	%			N/A				N/A
Bank			250,538				14.79	%			101,650				6.00	%			144,004				8.50	%			135,533				8.00	%
Common equity tier I capital to risk-weighted assets
Company			250,578				14.78	%			76,283				4.50	%			118,662				7.00	%			N/A				N/A
Bank			250,538				14.79	%			76,237				4.50	%			118,592				7.00	%			110,121				6.50	%
Tier I capital to average assets
Company			250,578				13.24	%			75,688				4.00	%			N/A				N/A				N/A				N/A
Bank			250,538				13.24	%			75,688				4.00	%			N/A				N/A				94,611				5.00	%
As of December 31, 2025
Total capital to risk-weighted assets
Company		$	261,451				15.24	%		$	137,201				8.00	%		$	180,076				10.50	%			N/A				N/A
Bank			261,411				15.25	%			137,120				8.00	%			179,970				10.50	%		$	171,400				10.00	%
Tier I capital to risk-weighted assets
Company			241,580				14.09	%			102,901				6.00	%			145,776				8.50	%			N/A				N/A
Bank			241,540				14.09	%			102,840				6.00	%			145,690				8.50	%			137,120				8.00	%
Common equity tier I capital to risk-weighted assets
Company			241,580				14.09	%			77,175				4.50	%			120,051				7.00	%			N/A				N/A
Bank			241,540				14.09	%			77,130				4.50	%			119,980				7.00	%			111,410				6.50	%
Tier I capital to average assets
Company			241,580				12.82	%			75,370				4.00	%			N/A				N/A				N/A				N/A
Bank			241,540				12.82	%			75,370				4.00	%			N/A				N/A				94,213				5.00	%

The federal banking agencies require that banking organizations meet several risk-based capital adequacy requirements. The current risk-based capital standards applicable to the Company and the Bank are based on the Basel III Capital Rules established by the Basel Committee on Banking Supervision (the “Basel Committee”). The Basel Committee is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each country’s supervisors in determining the supervisory policies they apply. The requirements are intended to ensure that banking organizations have adequate capital given the risk levels of assets and off-balance sheet financial instruments.

The Basel III Capital Rules require the Bank and the Company to comply with four minimum capital standards: a Tier 1 leverage ratio of at least 4.0%; a Common Equity Tier 1 (“CET1”) capital to risk-weighted assets of 4.5%; a Tier 1 capital to risk-weighted assets of at least 6.0%; and a total capital to risk-weighted assets of at least 8.0%. The calculation of all types of regulatory capital is subject to definitions, deductions and adjustments specified in the regulations.

The Basel III Capital Rules also require a “capital conservation buffer” of 2.5% above the regulatory minimum risk-based capital requirements. The capital conservation buffer is designed to absorb losses during periods of economic stress and effectively increases the minimum required risk-weighted capital ratios.  Banking institutions with a ratio of CET1 to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer) are subject to limitations on certain activities, including payment of dividends, share repurchases and discretionary bonuses to executive officers based on the amount of the shortfall.

As of March 31, 2026, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements under the Basel III Capital Rules on a fully phased-in basis.

The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.  At March 31, 2026, approximately $84.1 million of retained earnings was available for dividend declaration from the Bank without prior regulatory approval.