Regulatory Capital Matters

6 Months Ended

Jun. 30, 2019

Regulatory Capital Requirements [Abstract]

Regulatory Capital Matters

Note 16. Regulatory Capital Matters

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. Under the Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer was 0.625% in 2016 and increased 0.625% annually until 2019. As of June 30, 2019, the capital conservation buffer for the Company is 2.50%. Management believes as of June 30, 2019 and December 31, 2018, the Bank met all capital adequacy requirements to which they are subject to. Based on recent changes to the Federal Reserve’s definition of a “Small Bank Holding Company” that increased the threshold to $3 billion in assets, the Company is not currently subject to separate minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will again be subject to capital measurements independent of the Bank. For comparison purposes, the Company’s ratios are included in following discussion as well, all of which would have exceeded the “well-capitalized” level had the Company been subject to separate capital minimums. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of June 30, 2019 and December 31, 2018, the Company and Bank meet all capital adequacy requirements to which they are subject.

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. At June 30, 2019 and December 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Actual and required capital amounts (in thousands) and ratios, exclusive of the capital conservation buffer, are presented below as of June 30, 2019 and December 31, 2018:

						Required for					Minimum
						Capital Adequacy					To be Considered
	Actual					Purposes					"Well Capitalized"
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2019:
Total capital (to risk-weighted assets)
Consolidated	$	144,488		15.45	%	N/A		N/A			N/A		N/A
Bank		143,731		15.37	%		74,800		8.00	%		93,500		10.00	%
Tier 1 capital (to risk-weighted assets)
Consolidated		134,887		14.42	%	N/A		N/A			N/A		N/A
Bank		134,130		14.35	%		56,100		6.00	%		74,800		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)
Consolidated		134,887		14.42	%	N/A		N/A			N/A		N/A
Bank		134,130		14.35	%		42,075		4.50	%		60,775		6.50	%
Tier 1 capital (to average assets)
Consolidated		134,887		12.24	%	N/A		N/A			N/A		N/A
Bank		134,130		12.18	%		44,061		4.00	%		55,076		5.00	%

						Required for					Minimum
						Capital Adequacy					To be Considered
	Actual					Purposes					"Well Capitalized"
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2018:
Total capital (to risk-weighted assets)
Consolidated	$	139,593		16.26	%	N/A		N/A			N/A		N/A
Bank		139,538		16.25	%		68,686		8.00	%		85,857		10.00	%
Tier 1 capital (to risk-weighted assets)
Consolidated		129,893		15.13	%	N/A		N/A			N/A		N/A
Bank		129,838		15.12	%		51,514		6.00	%		68,686		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)
Consolidated		129,893		15.13	%	N/A		N/A			N/A		N/A
Bank		129,838		15.12	%		38,636		4.50	%		55,807		6.50	%
Tier 1 capital (to average assets)
Consolidated		129,893		12.88	%	N/A		N/A			N/A		N/A
Bank		129,838		12.87	%		40,346		4.00	%		50,432		5.00	%