2021 Annual Report

Minimum Required For Capital Adequacy

For Capital Adequacy Purposes Plus Capital Conservation Buffer

To be Well Capitalized Under Prompt Corrective Action Regulations

Actual

Purposes

December 31, 2020

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

(dollars in thousands) Company (Consolidated): Total Risk-based Capital. . . . . . Tier 1 Risk-based Capital . . . . . Common Equity Tier 1 Capital . Tier 1 Leverage Ratio. . . . . . . . Bank: Total Risk-based Capital. . . . . . Tier 1 Risk-based Capital . . . . . Common Equity Tier 1 Capital . Tier 1 Leverage Ratio. . . . . . . .

$ 360,198 14.58 % $ 197,604 255,530 10.35 148,203 255,530 10.35 111,152 255,530 9.28 110,168 $ 330,380 13.37 % $ 197,629 299,447 12.12 148,222 299,447 12.12 111,166 299,447 10.89 109,972

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 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, 2021, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. Off-Balance Sheet Arrangements In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets. These transactions include commitments to extend credit, standby letters of credit, and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Most of these commitments mature within two years and the standby letters of credit are expected to expire without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk- based capital that the Company and the Bank are required to hold. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by the contractual or notional amount of those instruments. The Company decreases its exposure to losses under these commitments by subjecting them to credit approval and monitoring procedures. The Company assesses the credit risk associated with certain commitments to extend credit and establishes a liability for probable credit losses. The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2021 and 2020: (dollars in thousands) Unfunded Commitments Under Lines of Credit . . . . . . . . . . . . . . . . . . $ 335,842 $ 463,306 $ 243,988 $ 400,350 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,521 109,126 10,954 79,252 Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 346,363 $ 572,432 $ 254,942 $ 479,602 Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon December 31, 2021 Fixed Variable December 31, 2020 Fixed Variable

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