2020 Annual Report
accounting practices. The Bank must also meet certain specific capital guidelines under the prompt corrective action framework. The capital amounts and classifications are subject to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets (referred to as the “leverage ratio”), as defined under the applicable regulatory capital rules. Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of December 31, 2020. The regulatory capital ratios for the Company and the Bank to meet the minimum capital adequacy standards and for the Bank to be considered well capitalized under the prompt corrective action framework are set forth in the following tables. The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated.
Minimum Required For Capital Adequacy To be Well Capitalized For Capital Adequacy Purposes Plus Capital Under Prompt Corrective
Actual
Purposes
Conservation Buffer
Action Regulations
December 31, 2020
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
(dollars in thousands) Company (Consolidated): Total Risk-based Capital. . . . . . . . . . $ 360,198 14.58 % $ 197,604 Tier 1 Risk-based Capital . . . . . . . . . 255,530 10.35 148,203 Common Equity Tier 1 Capital . . . . . 255,530 10.35 111,152 Tier 1 Leverage Ratio. . . . . . . . . . . . 255,530 9.28 110,168 Bank: Total Risk-based Capital. . . . . . . . . . $ 330,380 13.37 % $ 197,629 Tier 1 Risk-based Capital . . . . . . . . . 299,447 12.12 148,222 Common Equity Tier 1 Capital . . . . . 299,447 12.12 111,166 Tier 1 Leverage Ratio. . . . . . . . . . . . 299,447 10.89 109,972 (dollars in thousands) Company (Consolidated): Total Risk-Based Capital . . . . . . . . . $ 269,613 12.98 % $ 166,163 Tier 1 Risk-Based Capital. . . . . . . . . 236,533 11.39 124,623 Common Equity Tier 1 Capital . . . . . 236,533 11.39 93,467 Tier 1 Leverage Ratio. . . . . . . . . . . . 236,533 10.69 88,498 Bank: Total Risk-Based Capital . . . . . . . . . $ 252,501 12.16 % $ 166,137 Tier 1 Risk-Based Capital. . . . . . . . . 243,461 11.72 124,603 Common Equity Tier 1 Capital . . . . . 243,461 11.72 93,452 Tier 1 Leverage Ratio. . . . . . . . . . . . 243,461 11.01 88,455 Actual December 31, 2019
8.00 % $ 259,355 6.00 209,954 4.50 172,904 4.00 110,168 8.00 % $ 259,388 6.00 209,981 4.50 172,925 4.00 109,972
10.50 %
N/A N/A N/A N/A
N/A N/A N/A N/A
8.50 7.00 4.00
10.50 % $ 247,036 8.50 197,629 7.00 160,574 4.00 137,465
10.00 %
8.00 6.50 5.00
Minimum Required For Capital Adequacy To be Well Capitalized For Capital Adequacy Purposes Plus Capital Under Prompt Corrective
Purposes
Conservation Buffer
Action Regulations
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
8.00 % $ 218,089 6.00 176,549 4.50 145,393 4.00 88,498 8.00 % $ 218,055 6.00 176,521 4.50 145,370 4.00 88,455
10.50 %
N/A N/A N/A N/A
N/A N/A N/A N/A
8.50 7.00 4.00
10.50 % $ 207,671 8.50 166,137 7.00 134,986 4.00 110,569
10.00 %
8.00 6.50 5.00
The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules require a capital conservation buffer of 2.5% that was added to the 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 dividend payments, stock repurchases and certain discretionary bonus payments to executive officers. At December 31, 2020, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. In 2019, the federal banking agencies issued a final rule to provide an optional simplified measure of capital adequacy for qualifying depository institutions and depository institution holding companies, titled the community bank leverage ratio, or CBLR framework. The Company has elected not to opt into the CBLR framework and will continue to compute regulatory capital ratios based on the Basel III Capital Rules discussed above.
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