Annual report pursuant to Section 13 and 15(d)

Regulatory Capital

v3.20.4
Regulatory Capital
12 Months Ended
Dec. 31, 2020
Regulated Operations [Abstract]  
Regulatory Capital

NOTE 13. REGULATORY CAPITAL

The Company and the Bank are subject to risk-based capital standards by which bank holding companies and banks are evaluated in terms of capital adequacy. These regulatory capital requirements are administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary action 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 the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. 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.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to each maintain minimum amounts and ratios. The Company’s and the Bank’s Total, Tier 1 and Common Equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), and Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations) are set forth in the table below. The risk-based capital rules require that banks and holding companies maintain a “capital conservation buffer” of 250 basis points in excess of the “minimum capital ratio.” The minimum capital ratio is equal to the prompt corrective action adequately capitalized threshold ratio. Failure to maintain the required capital conservation buffer will result in limitations on capital distributions and on discretionary bonuses to executive officers. Management believes, as of December 31, 2020 and 2019, that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of December 31, 2020, the most recent notification from the regulatory banking agencies categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum Total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. To the knowledge of management, there are no conditions or events since these notifications that have changed the Bank’s category.

The table below provides a comparison of the Company’s and the Bank’s risk-based capital ratios and leverage ratios to the minimum regulatory requirements as of the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Capital

 

 

Requirement with

 

 

Minimum To Be Well

 

 

 

Actual

 

 

Requirement

 

 

Capital Buffer

 

 

Capitalized

 

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

 

(Dollars in thousands)

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

271,025

 

 

 

9.90

%

 

$

109,525

 

 

 

4.0

%

 

$

109,525

 

 

 

4.000

%

 

N/A

 

 

N/A

 

Bank

 

 

279,135

 

 

 

10.30

%

 

 

108,406

 

 

 

4.0

%

 

 

108,406

 

 

 

4.000

%

 

 

135,507

 

 

 

5.0

%

Common equity tier 1

   capital ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

271,025

 

 

 

11.94

%

 

 

102,124

 

 

 

4.5

%

 

 

158,860

 

 

 

7.000

%

 

N/A

 

 

N/A

 

Bank

 

 

279,135

 

 

 

12.29

%

 

 

102,229

 

 

 

4.5

%

 

 

159,024

 

 

 

7.000

%

 

 

147,665

 

 

 

6.5

%

Tier 1 risk-based capital

   ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

271,025

 

 

 

11.94

%

 

 

136,166

 

 

 

6.0

%

 

 

192,901

 

 

 

8.500

%

 

N/A

 

 

N/A

 

Bank

 

 

279,135

 

 

 

12.29

%

 

 

136,306

 

 

 

6.0

%

 

 

181,741

 

 

 

8.500

%

 

 

181,741

 

 

 

8.0

%

Total risk-based capital

   ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

324,141

 

 

 

14.28

%

 

 

181,554

 

 

 

8.0

%

 

 

238,290

 

 

 

10.500

%

 

N/A

 

 

N/A

 

Bank

 

 

295,251

 

 

 

13.00

%

 

 

181,741

 

 

 

8.0

%

 

 

238,535

 

 

 

10.500

%

 

 

227,177

 

 

 

10.0

%

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

261,888

 

 

 

12.37

%

 

$

84,677

 

 

 

4.0

%

 

$

84,677

 

 

 

4.000

%

 

N/A

 

 

N/A

 

Bank

 

 

252,769

 

 

 

11.29

%

 

 

89,563

 

 

 

4.0

%

 

 

89,563

 

 

 

4.000

%

 

 

111,954

 

 

 

5.0

%

Common equity tier 1

   capital ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

261,888

 

 

 

14.47

%

 

 

81,445

 

 

 

4.5

%

 

 

126,692

 

 

 

7.000

%

 

N/A

 

 

N/A

 

Bank

 

 

252,769

 

 

 

13.98

%

 

 

81,373

 

 

 

4.5

%

 

 

126,581

 

 

 

7.000

%

 

 

117,539

 

 

 

6.5

%

Tier 1 risk-based capital

   ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

261,888

 

 

 

14.47

%

 

 

108,593

 

 

 

6.0

%

 

 

153,840

 

 

 

8.500

%

 

N/A

 

 

N/A

 

Bank

 

 

252,769

 

 

 

13.98

%

 

 

108,498

 

 

 

6.0

%

 

 

153,705

 

 

 

8.500

%

 

 

144,664

 

 

 

8.0

%

Total risk-based capital

   ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

268,722

 

 

 

14.85

%

 

 

144,791

 

 

 

8.0

%

 

 

190,038

 

 

 

10.500

%

 

N/A

 

 

N/A

 

Bank

 

 

259,603

 

 

 

14.36

%

 

 

144,664

 

 

 

8.0

%

 

 

189,871

 

 

 

10.500

%

 

 

180,830

 

 

 

10.0

%