Regulatory Capital Requirements

3 Months Ended

Mar. 31, 2017

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 believed that as of March 31, 2017, the Company and the Bank met 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. The Company and the Bank are subject to the 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 require a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a Tier 1 capital to risk-weighted assets minimum ratio of 6.0%, a Total Capital to risk-weighted assets minimum ratio of 8.0%, and a Tier 1 leverage minimum ratio of 4.0%. A 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, was 1.25% effective on January 1, 2017, and will further 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.

As of March 31, 2017 and December 31, 2016, 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, 2017 and December 31, 2016:

(Dollars in thousands)						For capital
	Actual					adequacy purposes
	Amount		Ratio			Amount		Ratio (1)
As of March 31, 2017
Leverage	$	90,260		10.05	%	$	35,914		4.0	%
Common Equity Tier 1 Capital		69,609		13.49	%		29,672		5.8	%
Tier 1 Capital		90,260		17.49	%		37,413		7.3	%
Total Risk Based Capital		95,901		18.58	%		47,733		9.3	%
As of December 31, 2016
Leverage	$	88,819		10.04	%	$	35,370		4.0	%
Common Equity Tier 1 Capital		68,263		13.32	%		26,265		5.1	%
Tier 1 Capital		88,819		17.33	%		33,952		6.6	%
Total Risk Based Capital		94,596		18.46	%		44,201		8.6	%

(1)  The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for March 31, 2017 and 0.625% for December 31, 2016.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at March 31, 2017 and December 31, 2016:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
As of March 31, 2017
Leverage	$	89,262		9.97	%	$	35,813		4.0	%	$	44,766		5.0	%
Common Equity Tier 1 Capital		89,262		17.35	%		29,583		5.8	%		33,442		6.5	%
Tier 1 Capital		89,262		17.35	%		37,301		7.3	%		41,159		8.0	%
Total Risk Based Capital		94,729		18.41	%		47,591		9.3	%		51,449		10.0	%
As of December 31, 2016
Leverage	$	88,076		9.98	%	$	35,284		4.0	%	$	44,105		5.0	%
Common Equity Tier 1 Capital		88,076		17.23	%		26,194		5.1	%		33,222		6.5	%
Tier 1 Capital		88,076		17.23	%		33,861		6.6	%		40,888		8.0	%
Total Risk Based Capital		93,560		18.31	%		44,083		8.6	%		51,110		10.0	%

(1)  The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for March 31, 2017 and 0.625% for December 31, 2016.