Capital Requirements and Restrictions on Retained Earnings

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

Capital Requirements and Restrictions on Retained Earnings

18.  Capital Requirements and Restrictions on Retained Earnings

Banks and financial holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, for the Bank, prompt corrective action (PCA) 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 result in regulatory enforcement actions. Under the Basel III rules, the Corporation and bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2016 is 0.625%. The net unrealized gain or loss on available for sale securities is included in computing regulatory capital. Management believes as of December 31, 2016 the Corporation and Bank meet all capital adequacy requirements to which they are subject.

The PCA regulations provide five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms alone do not 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; brokered deposits may not be accepted, renewed or rolled over; and capital restoration plans are required. As of December 31, 2016 and 2015, the most recent regulatory notifications categorized the Bank as well capitalized under the PCA regulatory framework. There are no events or conditions since this notification that management believes have changed the Bank’s capital category.

Actual and required capital amounts and ratios are presented below as of December 31, 2016 and 2015:

	Actual					For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
December 31, 2016
Total Capital to Risk Weighted Assets
Consolidated		$261,530		14.05	%		$160,501		8.625%		N/A
Bank		$242,592		13.19	%		$158,590		8.625%		$183,873		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$195,200		10.49	%		$123,283		6.625%		N/A
Bank		$228,109		12.41	%		$121,816		6.625%		$147,098		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$175,200		9.41	%		$95,370		5.125%		N/A
Bank		$220,730		12.00	%		$94,235		5.125%		$119,517		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$195,200		7.85	%		$99,430		4.00%		N/A
Bank		$228,109		9.36	%		$97,527		4.00%		$121,909		5.00%
December 31, 2015
Total Capital to Risk Weighted Assets
Consolidated		$212,711		13.18	%		$129,135		8.00%		N/A
Bank		$193,301		12.07	%		$128,132		8.00%		$160,166		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$195,974		12.14	%		$96,851		6.00%		N/A
Bank		$178,353		11.14	%		$96,099		6.00%		$128,132		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$175,974		10.90	%		$72,638		4.50%		N/A
Bank		$170,974		10.67	%		$72,074		4.50%		$104,108		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$195,974		8.73	%		$89,782		4.00%		N/A
Bank		$178,353		8.06	%		$88,464		4.00%		$110,581		5.00%

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available for sales securities is included in computing regulatory capital.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. During 2017, $25,073 of accumulated net earnings of the Bank included in consolidated stockholders’ equity, plus any 2017 net profits retained to the date of the dividend declared, is available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements described above.