Regulatory Matters

12 Months Ended

Dec. 31, 2020

Regulatory Matters [Abstract]

Regulatory Matters

NOTE 17, Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can cause certain mandatory and possibly additional discretionary actions to be initiated by regulators that, if undertaken, could have a direct material effect on 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 their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Federal banking regulations also impose regulatory capital requirements on bank holding companies. Under the small bank holding company policy statement of the FRB, which applies to certain bank holding companies with consolidated total assets of less than $3 billion, the Company is not subject to regulatory capital requirements.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, Tier 1, and common equity tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. The terms Tier 1 and common equity tier 1 capital, risk-weighted assets and average assets, as used in this note, are as defined in the applicable regulations. Management believes, as of December 31, 2020 and 2019, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

On September 17, 2019 the FDIC finalized a rule that introduced an optional simplified measure of capital adequacy for qualifying community banking organizations, CBLRF as required by the EGRRCPA. The CBLRF is designed to reduce burden by removing the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. In order to qualify for the CBLR framework, a community banking organization must have a Tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. The CBLRF was available for banks to begin using in their March 31, 2020, Call Report. The Bank did not opt into the CBLR framework.

As of December 31, 2020, the most recent notification from the Comptroller categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, common equity tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and ratios as of December 31, 2020 and 2019 are presented in the table below.

	2020						2019
	Regulatory						Regulatory
	Minimums			December 31, 2020			Minimums			December 31, 2019
Common Equity Tier 1 Capital to Risk-Weighted Assets		4.500	%		11.69	%		4.500	%		11.73	%
Tier 1 Capital to Risk-Weighted Assets		6.000	%		11.69	%		6.000	%		11.73	%
Tier 1 Leverage to Average Assets		4.000	%		8.56	%		4.000	%		9.73	%
Total Capital to Risk-Weighted Assets		8.000	%		12.77	%		8.000	%		12.86	%
Capital Conservation Buffer		2.500	%		4.77	%		2.500	%		4.86	%
Risk-Weighted Assets (in thousands)				$	890,091					$	863,905

The approval of the Comptroller is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank’s net profits for that year combined with its retained net profits for the preceding two calendar years. Under this formula, the Bank and Trust can distribute as dividends to the Company in 2021, without approval of the Comptroller, $7.6 million plus an additional amount equal to the Bank’s and Trust’s retained net profits for 2021 up to the date of any dividend declaration.