v3.26.1
Regulatory Capital Requirements
 6 Months Ended
Jun. 30, 2026
Regulatory Capital Requirements
11. Regulatory Capital Requirements

 

Banks and bank holding companies, such as the Company, 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 accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of June 30, 2026 and December 31, 2025, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.

 

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.

 

Banking organizations are required to maintain minimum capital levels as follows: a ratio of common equity Tier 1 capital equal to 4.5% of risk-weighted assets , a ratio of Tier 1 capital equal to 6.0% of risk-weighted assets, a ratio of total capital equal to 8.0% of risk-weighted assets, and a leverage ratio of Tier 1 capital to total quarterly average assets equal to 4.0% in all circumstances.

 

As of 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 then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

 

Regulations include a capital conservation buffer of 2.5% that is added to these minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including the amount of dividends that it may pay without prior regulatory approval, stock repurchases and certain discretionary bonus payments to executive officers. At June 30, 2026 and December 31, 2025, the ratios for the Company and the Bank were sufficient to meet the conservation buffer.

 

 

The following is a comparison of the Company’s regulatory capital ratios to minimum capital ratio requirements as of June 30, 2026 and December 31, 2025:

 

(Dollars in thousands)            
           For capital 
   Actual   adequacy purposes 
   Amount   Ratio   Amount   Ratio (1) 
As of June 30, 2026                
Leverage  $162,442    10.29%  $63,121    4.0%
Common Equity Tier 1 Capital   141,442    11.89%   83,249    7.0%
Tier 1 Capital   162,442    13.66%   101,088    8.5%
Total Risk Based Capital   175,410    14.75%   124,874    10.5%
                     
As of December 31, 2025                    
Leverage  $154,316    9.77%  $63,151    4.0%
Common Equity Tier 1 Capital   133,316    11.26%   82,901    7.0%
Tier 1 Capital   154,316    13.03%   100,666    8.5%
Total Risk Based Capital   166,714    14.08%   124,352    10.5%

 

(1)The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.

 

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements as of June 30, 2026 and December 31, 2025:

 

                   To be well-capitalized 
                   under prompt 
(Dollars in thousands)      For capital   corrective 
   Actual   adequacy purposes   action provisions 
   Amount   Ratio   Amount   Ratio (1)   Amount   Ratio 
As of June 30, 2026                        
Leverage  $159,899    10.17%  $62,919    4.0%  $78,649    5.0%
Common Equity Tier 1 Capital   159,899    13.45%   83,196    7.0%   77,253    6.5%
Tier 1 Capital   159,899    13.45%   101,023    8.5%   95,081    8.0%
Total Risk Based Capital   172,867    14.54%   124,793    10.5%   118,851    10.0%
                               
As of December 31, 2025                              
Leverage  $152,915    9.67%  $63,223    4.0%  $79,029    5.0%
Common Equity Tier 1 Capital   152,915    12.92%   82,871    7.0%   76,951    6.5%
Tier 1 Capital   152,915    12.92%   100,629    8.5%   94,709    8.0%
Total Risk Based Capital   165,313    13.96%   124,306    10.5%   118,387    10.0%

 

(1)The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5%.