Note 21 - Regulatory Capital Matters

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

(

2

1

)

Regulatory

Capital

Matters

The amount of dividends payable to the parent company from the subsidiary bank is limited by various banking regulatory agencies. Upon approval by regulatory authorities, the Bank

may

pay cash dividends to the parent company in excess of regulatory limitations.

The Company is subject to various regulatory capital requirements administered by the federal 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 consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification 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 Company to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets. As of

December 31, 2018,

the interim final Basel III rules (Basel III) require the Company to also maintain minimum amounts and ratios of common equity Tier

1

capital to risk weighted assets. These amounts and ratios as defined in regulations are presented hereafter. Management believes, as of

December 31, 2018,

the Company meets all capital adequacy requirements to which it is subject under the regulatory framework for prompt corrective action. In the opinion of management, there are

no

conditions or events since prior notification of capital adequacy from the regulators that have changed the institution’s category.

The Basel III rules also require the implementation of a new capital conservation buffer comprised of common equity Tier

1

capital. The capital conservation buffer was phased in beginning

January 1, 2016

at

0.625

percent of risk-weighted assets, with subsequent increases of

0.625

percent each year until reaching its final level of

2.5

percent on

January 1, 2019.

The following table summarizes regulatory capital information as of

December 31, 2018

and

December 31, 2017

on a consolidated basis and for the subsidiary, as defined. Regulatory capital ratios for

December 31, 2018

and

2017

were calculated in accordance with the Basel III rules.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2018	(In Thousands)
Total Capital to Risk-Weighted Assets
Consolidated	$	133,900		15.86	%	$	67,527		8.00	%		N/A		N/A
Colony Bank		131,723		15.63			67,418		8.00			84,272		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		126,623		15.00			50,645		6.00			N/A		N/A
Colony Bank		124,446		14.77			50,563		6.00			67,418		8.00
Common Equity Tier 1 Capital to Risk-Weighted Assets
Consolidated		103,123		12.22			37,984		4.50			N/A		N/A
Colony Bank		124,446		14.77			37,923		4.50			54,777		6.50
Tier I Capital to Average Assets
Consolidated		126,623		10.24			49,478		4.00			N/A		N/A
Colony Bank		124,446		10.08			49,396		4.00			61,745		5.00
As of December 31, 2017
Total Capital to Risk-Weighted Assets
Consolidated	$	127,786		15.56	%	$	65,718		8.00	%		N/A		N/A
Colony Bank		127,470		15.54			65,628		8.00		$	82,036		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		120,279		14.64			49,289		6.00			N/A		N/A
Colony Bank		119,963		14.62			49,221		6.00			65,628		8.00
Common Equity Tier 1 Capital to Risk-Weighted Assets
Consolidated		96,779		11.78			36,967		4.50			N/A		N/A
Colony Bank		119,963		14.62			36,916		4.50			53,323		6.50
Tier I Capital to Average Assets
Consolidated		120,279		9.89			48,635		4.00			N/A		N/A
Colony Bank		119,963		9.88			48,566		4.00			60,708		5.00

In

2018,

the Bank obtained approval of its regulators and paid a

$8,300,000

dividend to the Company. The dividend was utilized to pay dividends to shareholders and to repurchase the Warrant, which was for

500,000

shares of the Company’s common stock outstanding with private investors. The Warrant was repurchased during the

second

quarter for

$3.2

million. In

2017,

the Bank obtained approval of its regulators and paid a

$8,725,000

dividend to the Company. The dividend was utilized to pay dividends to shareholders and to redeem

9,360

shares of Preferred Stock. In

2016,

the Bank obtained approval of its regulators and paid a

$9,100,000

dividend to the Company. The dividend was utilized to redeem

8,661

shares of Preferred Stock.