Note 12 - Minimum Regulatory Capital Requirement

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note

12

: Minimum Regulatory Capital Requirement

The Company (on a consolidated basis) and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and 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 regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

The Basel III Capital Rules, a comprehensive capital framework for U.S. banking organizations, became effective for the Company and the Bank on

January

1,

2015

(subject to a phase-in period continuing through

January

2,

2019

for certain provisions). Basel III Capital Rules established quantitative measures to ensure capital adequacy. The rules set forth minimum amounts and ratios for Common Equity Tier

1

capital

(“CET1”),

Tier

1

capital and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier

1

capital to adjusted quarterly average assets (as defined).

The Company’s and the Bank’s

CET1

capital include common stock and related surplus and retained earnings. Basel III Capital Rules provide an option to exclude components of accumulated other comprehensive income (loss) from

CET1

capital. Once made, the election is final and cannot be changed. The Company and the Bank elected to exclude components of accumulated other comprehensive income from

CET1

capital.

Tier

1

Capital includes

CET1

capital and additional Tier

1

capital components. At

December

31,

2016

and

2015,

neither the Company nor the Bank held any additional Tier

1

capital beyond

CET1

capital.

Total capital includes Tier

1

capital and Tier

2

capital. Tier

2

capital for both the Company and the Bank includes the allowance for loan losses.

Risk-weighted assets at

December

31,

2016

were

$718,739

for the Company and

$715,294

for the Bank. Risk-weighted assets at

December

31,

2015

were

$721,012

for the Company and

$719,077

for the Bank. Management believes, as of

December

31,

2016

and

2015,

that the Company and the Bank met all capital adequacy requirements to which they are subject.

As of

December

31,

2016,

the most recent notifications from the Office of the Comptroller of the Currency 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 these notifications that management believes have changed the bank’s category. The Company’s and the bank’s actual capital amounts and ratios as of

December

31,

2016

and

2015

are also presented in the following tables.

	Actual					Minimum Capital Requirement (1)					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 201 6
Total capital (to risk weighted assets)
NBI consolidated	$	191,006		26.575	%	$	57,499		8.625	%		N/A		N/A
NBB		188,095		26.296	%		57,224		8.625	%	$	71,529		10.000	%
Tier 1 capital (to risk weighted assets)
NBI consolidated	$	182,706		25.420	%	$	43,124		6.625	%		N/A		N/A
NBB		179,795		25.136	%		42,918		6.625	%	$	57,224		8.000	%
Common Equity Tier 1 capital (to risk weighted assets)
NBI consolidated	$	182,706		25.420	%	$	32,343		5.125	%		N/A		N/A
NBB		179,795		25.136	%		32,188		5.125	%	$	46,494		6.500	%
Tier 1 capital (to average assets)
NBI consolidated	$	182,706		15.121	%	$	48,333		4.000	%		N/A		N/A
NBB		179,795		14.964	%		48,060		4.000	%	$	60,075		5.000	%

(1) Except with regard to the Company ’s and the Bank’s Tier 1 capital to average assets ratio, the minimum capital requirement includes the current phased-in portion of the Basel III Capital Rules capital conservation buffer (0.625%) which is added to the minimum capital requirements for capital adequacy purposes. The capital conservation buffer is being phased in through four equal annual installments of 0.625% from 2016 to 2019, with full implementation in January 2019 (2.5%). The Company’s and the Bank’s capital conservation buffer must consist of additional CET1 above regulatory minimum requirement. Failure to maintain the prescribed levels would result in limitations on capital distributions and discretionary bonuses to executives.

	Actual					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2015
Total capital (to risk weighted assets)
NBI consolidated	$	184,054		25.527	%	$	57,681		8.000	%		N/A		N/A
NBB		181,926		25.300	%		57,526		8.000	%	$	71,908		10.000	%
Tier 1 capital (to risk weighted assets)
NBI consolidated	$	175,757		24.376	%	$	43,261		6.000	%		N/A		N/A
NBB		173,629		24.146	%		43,145		6.000	%	$	57,526		8.000	%
Common Equity Tier 1 capital (to risk weighted assets)
NBI consolidated	$	175,757		24.376	%	$	32,446		4.500	%		N/A		N/A
NBB		173,629		24.146	%		32,358		4.500	%	$	46,740		6.500	%
Tier 1 capital (to average assets)
NBI consolidated	$	175,757		15.088	%	$	46,594		4.000	%		N/A		N/A
NBB		173,629		14.888	%		46,648		4.000	%	$	58,310		5.000	%