Note 4 - Regulatory Capital

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

( 4 ) Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the banking agencies. 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 Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve 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 are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Bank is subject to the Basel III capital level threshold requirements under the Prompt Corrective Action regulations which phased in full compliance over a multi-year schedule. These regulations were designed to ensure that banks maintain strong capital positions even in the event of severe economic downturns or unforeseen losses.

The Bank is subject to the capital conservation buffer rules which place limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers. In order to avoid these limitations, a bank must hold a capital conservation buffer above its minimum risk-based capital requirements. As of

March 31, 2019,

the Bank’s capital conservation buffer exceeded the minimum requirement of

2.50%.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and percentages (set forth in the table below) of total and Tier

1

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

1

capital (as defined) to average assets (as defined). Management believes, as of

March 31, 2019

that the Bank meets all capital adequacy requirements to which it is subject.

As of

March 31, 2019,

the Bank is well capitalized under the regulatory framework for prompt corrective action. To be categorized as adequately capitalized, the Bank must maintain minimum total risk-based, Tier

1

risk-based, and Tier

1

leverage percentages as set forth in the table. 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 percentages are also presented in the following table.

	Actual					For Capital Adequacy Purposes					For Well Capitalized Purposes
(dollars in thousands)	Amount		Percentage			Amount		Percentage			Amount		Percentage
As of March 31, 2019
Tier 1 Leverage Capital	$	38,819		9.18	%	$	16,907		4.00	%	$	21,134		5.00	%
Common Equity Tier 1 Risk-based Capital		38,819		13.00			13,434		4.50			19,404		6.50
Tier 1 Risk-based Capital		38,819		13.00			17,912		6.00			23,882		8.00
Total Risk-based Capital		42,552		14.25			23,882		8.00			29,853		10.00
As of December 31, 2018
Tier 1 Leverage Capital	$	37,805		9.28	%	$	16,288		4.00	%	$	20,360		5.00	%
Common Equity Tier 1 Risk-based Capital		37,805		12.90			13,190		4.50			19,052		6.50
Tier 1 Risk-based Capital		37,805		12.90			17,587		6.00			23,449		8.00
Total Risk-based Capital		41,466		14.15			23,449		8.00			29,311		10.00