Regulatory Capital Requirements

3 Months Ended

Mar. 31, 2016

Banking and Thrift [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

8. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of March 31, 2016, the Company and its subsidiary, Landmark National Bank (“the Bank”) meet all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. On January 1, 2015, the Company and the Bank became subject to new capital rules (the “Basel III Rules”) that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules have maintained the general structure of the prompt corrective action framework, while incorporating increased requirements. The Basel III Rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. A new capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets, and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The capital conservation buffer increases the common equity Tier 1 capital ratio, Tier 1 capital and total risk based capital ratios as of March 31 of each year. The Bank made the one-time accumulated other comprehensive income (“AOCI”) opt-out election on its first Call Report filed after January 1, 2015, which allowed banks under $250 billion a one-time opt-out election to remove the impact of certain unrealized capital gains and losses from the calculation of capital.

As of March 31, 2016 and December 31, 2015, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at March 31, 2016 and December 31, 2015:

(Dollars in thousands)						For capital
	Actual					adequacy purposes*
	Amount		Ratio			Amount		Ratio
As of March 31, 2016
Leverage	$	83,139		9.67	%	$	34,407		4.0	%
Common Equity Tier 1 Capital		62,683		11.77	%		27,285		5.1	%
Tier 1 Capital		83,139		15.62	%		35,271		6.6	%
Total Risk Based Capital		89,427		16.80	%		45,919		8.6	%
As of December 31, 2015
Leverage	$	80,401		9.43	%	$	34,092		4.0	%
Common Equity Tier 1 Capital		60,375		11.05	%		24,584		4.5	%
Tier 1 Capital		80,401		14.72	%		32,779		6.0	%
Total Risk Based Capital		87,214		15.96	%		43,706		8.0	%

*The ratios for March 31, 2016 include a capital conservation buffer of 0.625%.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at March 31, 2016 and December 31, 2015:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes*					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2016
Leverage	$	81,293		9.49	%	$	34,270		4.0	%	$	42,837		5.0	%
Common Equity Tier 1 Capital		81,293		15.31	%		27,212		5.1	%		34,513		6.5	%
Tier 1 Capital		81,293		15.31	%		35,177		6.6	%		42,478		8.0	%
Total Risk Based Capital		87,312		16.44	%		45,797		8.6	%		53,097		10.0	%
As of December 31, 2015
Leverage	$	79,857		9.40	%	$	33,993		4.0	%	$	42,491		5.0	%
Common Equity Tier 1 Capital		79,857		14.66	%		24,519		4.5	%		35,416		6.5	%
Tier 1 Capital		79,857		14.66	%		32,692		6.0	%		43,589		8.0	%
Total Risk Based Capital		85,929		15.77	%		43,589		8.0	%		54,486		10.0	%

*The ratios for March 31, 2016 include a capital conservation buffer of 0.625%