REGULATORY MATTERS

6 Months Ended

Jun. 30, 2026

NOTE 12 – REGULATORY MATTERS

Banks and bank 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 practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”), the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of June 30, 2026 the Company and Bank meet 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. At June 30, 2026 and December 31, 2025 the most recent regulatory notifications 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 institution’s category.

The table below summarizes the capital requirements applicable to the Company and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company’s and the Bank’s capital ratios as of June 30, 2026 and December 31, 2025. The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of June 30, 2026 and December 31, 2025.


										To Be Well Capitalized
						Minimum Capital Required -				Under Prompt Corrective
		Actual				Basel III				Action Provisions:
(Dollars in thousands)		Amount			Ratio	Amount ≥		Ratio ≥		Amount ≥	Ratio ≥
As of June 30, 2026:
Total Capital (to Risk Weighted Assets)
Consolidated		$	526,241		18.05	311,473		10.5	%	N/A	N/A
Bank			526,023		18.05	305,955		10.5		291,386	10.0	%
Tier I Capital (to Risk Weighted Assets)
Consolidated			499,888		17.15	252,145		8.5	%	N/A	N/A
Bank			499,670		17.15	247,678		8.5		233,109	8.0	%
Common Tier 1 (CET1)
Consolidated			499,888		17.15	207,649		7.0	%	N/A	N/A
Bank			499,670		17.15	203,970		7.0		189,401	6.5	%
Tier 1 Capital (to Average Assets)
Consolidated			499,888		11.08	182,534		4.0	%	N/A	N/A
Bank			499,670		11.08	180,432		4.0		225,539	5.0	%

As of December 31, 2025:
Total Capital (to Risk Weighted Assets)
Consolidated		$	501,973		16.85	312,741		10.5	%	N/A	N/A
Bank			499,580		16.77	312,726		10.5		297,835	10.0	%
Tier I Capital (to Risk Weighted Assets)
Consolidated			473,843		15.91	253,171		8.5	%	N/A	N/A
Bank			471,450		15.83	253,159		8.5		238,268	8.0	%
Common Tier 1 (CET1)
Consolidated			473,843		15.91	208,494		7.0	%	N/A	N/A
Bank			471,450		15.83	208,484		7.0		193,592	6.5	%
Tier 1 Capital (to Average Assets)
Consolidated			473,843		10.00	189,572		4.0	%	N/A	N/A
Bank			471,450		9.84	191,629		4.0		239,536	5.0	%

- 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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