Note 11 - Regulatory Matters

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

11. Regulatory Matters

The Company and its subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements and a capital conservation buffer in excess of the required minimums, which is being phased in through 2019

,

will initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the banks must meet specific capital guidelines that involve quantitative measures of the banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and its subsidiary banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Company and each of its bank subsidiaries meet the minimum capital ratios and a fully phased-in capital conservation buffer

.

The regulatory ratios of the consolidated Company and its subsidiary banks were as follows for the dates indicated:

	September 30, 2016												December 31, 2015
	Common Equity Tier  1 Risk- based  Capital 1			Tier 1 Risk- based Capital 1			Total Risk- based Capital 1			Tier 1 Leverage 2			Common Equity Tier  1 Risk- based Capital 1			Tier 1 Risk- based Capital 1			Total Risk- based Capital 1			Tier 1 Leverage 2
Consolidated		16.65	%		19.57	%		20.39	%		12.44	%		14.91	%		19.00	%		19.89	%		12.46	%
Farmers Bank		17.12			17.12			17.84			9.53			15.57			15.57			16.35			9.20
United Bank		17.54			17.54			18.51			12.46			18.67			18.67			19.68			12.89
First Citizens		14.73			14.73			15.32			10.08			13.55			13.55			14.17			9.20
Citizens Northern		15.37			15.37			16.43			10.43			14.42			14.42			15.67			10.79
Regulatory minimum		4.50			6.00			8.00			4.00			4.50			6.00			8.00			4.00
Well-capitalized status		6.50			8.00			10.00			5.00			6.50			8.00			10.00			5.00

1

Common Equity Tier 1 Risked-based, Tier 1 Risk-based, and Total Risk-based Capital ratios are computed by dividing a bank’s Common Equity Tier 1, Tier 1 or Total Capital, as defined by regulation, by a risk-weighted sum of the bank’s assets, with the risk weighting determined by general standards established by regulation.

2

Tier 1 Leverage ratio is computed by dividing a bank’s Tier 1 Capital by its total quarterly average assets, as defined by regulation

.