REGULATORY CAPITAL REQUIREMENTS

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

REGULATORY CAPITAL REQUIREMENTS

REGULATORY CAPITAL REQUIREMENTS

The Corporation and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additional 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. The final rules implementing Basel III rules became effective for the Corporation 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 sale securities and changes in the funded status of the defined benefit pension plan and other benefit plans are not included in computing regulatory capital. Capital amounts and ratios for December 31, 2014 are calculated using Basel I rules. As capital ratios as of December 31, 2015 are calculated under the requirements of Basel III and capital ratios as of December 31, 2014 are calculated under the Basel requirements of Basel I, these capital ratios are not considered comparative. Management believes as of December 31, 2015, the Corporation and the 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. Management believes that, as of December 31, 2015 and 2014, the Corporation and the Bank met all capital adequacy requirements to which they were subject.

As of December 31, 2015, the most recent notification from the Federal Reserve Bank of New York categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized the Bank 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 table below.  There have been no conditions or events since that notification that management believes have changed the Bank's or the Corporation's capital category.

The Corporation’s principal source of funds for dividend payments is dividends received from the Bank.  Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies.  Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net income, combined with the retained net income of the preceding two years, subject to the capital requirements in the table below.  During 2016, the Bank could, without prior approval, declare dividends of approximately $14.2 million plus any 2016 net income retained to the date of the dividend declaration.

The actual capital amounts and ratios of the Corporation and the Bank are presented in the following tables (in thousands):

	Actual				Required To Be Adequately Capitalized				Required To Be Well Capitalized
As of December 31, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	139,049	12.26	%	$	90,704	8.00	%	N/A		N/A
Bank	$	135,058	11.93	%	$	90,548	8.00	%	$	113,185	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	124,787	11.01	%	$	68,028	6.00	%	N/A		N/A
Bank	$	120,881	10.68	%	$	67,911	6.00	%	$	90,548	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	124,787	11.01	%	$	51,021	4.50	%	N/A		N/A
Bank	$	120,881	10.68	%	$	50,933	4.50	%	$	73,571	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	124,787	7.83	%	$	63,772	4.00	%	N/A		N/A
Bank	$	120,881	7.59	%	$	63,701	4.00	%	$	79,626	5.00	%

As of December 31, 2014
Total Capital (to Risk Weighted Assets):
Consolidated	$	129,211	11.84	%	$	87,271	8.00	%	N/A		N/A
Bank	$	123,685	11.35	%	$	87,178	8.00	%	$	108,972	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	115,483	10.59	%	$	43,636	4.00	%	N/A		N/A
Bank	$	110,014	10.10	%	$	43,589	4.00	%	$	65,383	6.00	%
Tier 1 Capital (to Average Assets):
Consolidated	$	115,483	7.78	%	$	44,556	3.00	%	N/A		N/A
Bank	$	110,014	7.41	%	$	44,512	3.00	%	$	74,187	5.00	%