Note 20 - Regulatory Matters

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

(20)

         

REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the OCC. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving 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 under the prompt corrective action guidelines 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 Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier

1

and common equity Tier

1

capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier

1

capital (as defined) to average assets (as defined). The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”) became effective for the Bank on

January

1,

2015,

with full compliance with all of the requirements being phased in over a multi-year schedule through

2019.

Under the Basel III rules, the Bank must hold a conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from

0.0%

for

2015

to

2.5%

by

2019.

The capital conservation buffer for

2016

is

0.625%.

Management believes that the Bank met all capital adequacy requirements to which it was subject as of

December

31,

2016

and

2015.

As of

December

31,

2016,

the most recent notification from the OCC 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 I risk-based, common equity Tier

1

risk-based and Tier I leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Bank’s actual capital amounts and ratios are presented in the following table. No amounts were deducted from capital for interest-rate risk in either year.

	Actual					Minimum for Capital Adequacy Purposes with Capital Conservation Buffer:					Minimum to be Well Capitalized under Prompt Corrective Action Provisions:
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2016 :
Total capital (to risk weighted assets)	$	71,832		14.98	%	$	41,354		8.625	%	$	47,946		10.00	%
Tier I capital (to risk weighted assets)	$	68,446		14.28	%	$	31,764		6.625	%	$	38,357		8.00	%
Common equity Tier I capital (to risk weighted assets)	$	68,446		14.28	%	$	24,572		5.125	%	$	31,165		6.50	%
Tier I capital (to average assets)	$	68,446		9.30	%	$	29,447		4.00	%	$	36,809		5.00	%
As of December 31, 2015 :
Total capital (to risk weighted assets)	$	67,540		16.07	%	$	33,624		8.00	%	$	42,030		10.00	%
Tier I capital (to risk weighted assets)	$	64,125		15.26	%	$	25,218		6.00	%	$	33,624		8.00	%
Common equity Tier I capital (to risk weighted assets)	$	64,125		15.26	%	$	18,913		4.50	%	$	27,319		6.50	%
Tier I capital (to average assets)	$	64,125		12.15	%	$	21,110		4.00	%	$	26,387		5.00	%