| REGULATORY CAPITAL REQUIREMENTS |
NOTE 9: REGULATORY CAPITAL REQUIREMENTS The Bank is subject to regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can trigger 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 the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. U.S. Basel III Capital Rules In 2013, the Federal Reserve Board approved final rules (the “U.S. Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations and implementing the Basel Committee on Banking Supervision’s December 2010 framework for strengthening international capital standards. The U.S. Basel III Capital Rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. The U.S. Basel III Capital Rules require the Bank to: | ● | Meet a minimum Common Equity Tier 1 Capital ratio of 4.50% of risk-weighted assets and a minimum Tier 1 Capital ratio of 6.00% of risk-weighted assets; |
| ● | Continue to require a minimum Total Capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 Leverage Capital ratio of 4.00% of average assets; |
| ● | Maintain a “capital conservation buffer” of 2.50% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus payments; and |
| ● | Comply with a revised definition of capital to improve the ability of regulatory capital instruments to absorb losses. Certain non-qualifying capital instruments, including cumulative preferred stock and TruPS, will be excluded as a component of Tier 1 capital for institutions of the Company’s size. |
The U.S. Basel III Capital Rules use a standardized approach for risk weightings that expand the risk-weightings for assets and off-balance sheet exposures from the previous 0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and off-balance sheet exposures, resulting in higher risk weights for a variety of asset categories. The capital conservation buffer at June 30, 2026 and September 30, 2025 is 2.50%. The Bank exceeded these “well-capitalized” and “capital conservation buffer” ratios for all periods presented. As of June 30, 2026 and September 30, 2025, the Bank’s capital levels meet the fully phased-in minimum capital requirements, including the new capital conservation buffers, as prescribed in the U.S. Basel III Capital Rules. As of June 30, 2026 and September 30, 2025, 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. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category. There are no comparable minimum capital requirements that apply to the Company as a savings and loan holding company with less than $3.0 billion in consolidated assets. The Bank’s actual and required capital amounts and ratios are presented in the table below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Minimum to be Well | | | | | | | | | | | | | Capitalized Under Prompt | | | | | | | | Minimum Capital | | Corrective Action | | | Actual | | Requirement | | Provisions | | | Amount ($) | | Ratio (%) | | Amount ($) | | Ratio (%) | | Amount ($) | | Ratio (%) | | | | (In Thousands) | As of June 30, 2026 (unaudited) | | | | | | | | | | | | | | | | Total Capital (to Risk-Weighted Assets) | | $ | 29,534 | | 25.7 | ≥ | $ | 9,180 | ≥ | 8.0 | ≥ | $ | 11,475 | ≥ | 10.0 | Tier 1 Capital (to Risk-Weighted Assets) | | | 28,384 | | 24.7 | ≥ | | 6,885 | ≥ | 6.0 | ≥ | | 9,180 | ≥ | 8.0 | Tier 1 Common Equity (to Risk-Weighted Assets) | | | 28,384 | | 24.7 | ≥ | | 5,164 | ≥ | 4.5 | ≥ | | 7,459 | ≥ | 6.5 | Tier 1 Leverage Ratio (to Adjusted Total Assets) | | | 28,384 | | 14.5 | ≥ | | 7,814 | ≥ | 4.0 | ≥ | | 9,767 | ≥ | 5.0 | Capital Conservation Buffer on Tier 1 Common Equity | | | 29,534 | | 17.7 | ≥ | | 8,033 | ≥ | 7.0 | ≥ | | N/A | ≥ | N/A | | | | | | | | | | | | | | | | | As of September 30, 2025 | | | | | | | | | | | | | | | | Total Capital (to Risk-Weighted Assets) | | $ | 28,255 | | 25.2 | ≥ | $ | 8,976 | ≥ | 8.0 | ≥ | $ | 11,221 | ≥ | 10.0 | Tier 1 Capital (to Risk-Weighted Assets) | | | 27,133 | | 24.2 | ≥ | | 6,732 | ≥ | 6.0 | ≥ | | 8,976 | ≥ | 8.0 | Tier 1 Common Equity (to Risk-Weighted Assets) | | | 27,133 | | 24.2 | ≥ | | 5,049 | ≥ | 4.5 | ≥ | | 7,293 | ≥ | 6.5 | Tier 1 Leverage Ratio (to Adjusted Total Assets) | | | 27,133 | | 13.9 | ≥ | | 7,798 | ≥ | 4.0 | ≥ | | 9,747 | ≥ | 5.0 | Capital Conservation Buffer on Tier 1 Common Equity | | | 28,255 | | 17.2 | ≥ | | 7,854 | ≥ | 7.0 | ≥ | | N/A | ≥ | N/A |
GS&L Municipal Bank’s actual and required capital amounts and ratios are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Minimum to be Well | | | | | | | | | | | | | Capitalized Under Prompt | | | | | | | | Minimum Capital | | Corrective Action | | | Actual | | Requirement | | Provisions | | | Amount ($) | | Ratio (%) | | Amount ($) | | Ratio (%) | | Amount ($) | | Ratio (%) | | | | (In Thousands) | As of June 30, 2026 (unaudited) | | | | | | | | | | | | | | | | Total Capital (to Risk-Weighted Assets) | | $ | 15,088 | | 92.8 | ≥ | $ | 1,301 | ≥ | 8.0 | ≥ | $ | 1,626 | ≥ | 10.0 | Tier 1 Capital (to Risk-Weighted Assets) | | | 15,088 | | 92.8 | ≥ | | 975 | ≥ | 6.0 | ≥ | | 1,301 | ≥ | 8.0 | Tier 1 Common Equity (to Risk-Weighted Assets) | | | 15,088 | | 92.8 | ≥ | | 732 | ≥ | 4.5 | ≥ | | 1,057 | ≥ | 6.5 | Tier 1 Leverage Ratio (to Adjusted Total Assets) | | | 15,088 | | 44.5 | ≥ | | 1,357 | ≥ | 4.0 | ≥ | | 1,696 | ≥ | 5.0 | Capital Conservation Buffer on Tier 1 Common Equity | | | 15,088 | | 84.8 | ≥ | | 1,138 | ≥ | 7.0 | ≥ | | N/A | ≥ | N/A | | | | | | | | | | | | | | | | | As of September 30, 2025 | | | | | | | | | | | | | | | | Total Capital (to Risk-Weighted Assets) | | $ | 14,571 | | 93.9 | ≥ | $ | 1,242 | ≥ | 8.0 | ≥ | $ | 1,552 | ≥ | 10.0 | Tier 1 Capital (to Risk-Weighted Assets) | | | 14,571 | | 93.9 | ≥ | | 931 | ≥ | 6.0 | ≥ | | 1,242 | ≥ | 8.0 | Tier 1 Common Equity (to Risk-Weighted Assets) | | | 14,571 | | 93.9 | ≥ | | 699 | ≥ | 4.5 | ≥ | | 1,009 | ≥ | 6.5 | Tier 1 Leverage Ratio (to Adjusted Total Assets) | | | 14,571 | | 40.0 | ≥ | | 1,458 | ≥ | 4.0 | ≥ | | 1,822 | ≥ | 5.0 | Capital Conservation Buffer on Tier 1 Common Equity | | | 14,571 | | 85.9 | ≥ | | 1,087 | ≥ | 7.0 | ≥ | | N/A | ≥ | N/A |
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