Regulatory Matters

12 Months Ended

Dec. 31, 2019

Banking and Thrift [Abstract]

Regulatory Matters

REGULATORY MATTERS

The primary source of funds for our dividends paid to our shareholders is dividends received from our subsidiaries.  Dividends paid by the subsidiary bank are subject to restrictions by banking law and regulations and require approval by the bank’s regulatory agency if dividends declared in any year exceed the bank’s current year's net income, as defined, plus its retained net profits of the two preceding years.  During 2020, the Bank will have $41.6 million plus net income for the interim periods through the date of declaration, available for dividends for distribution to us.  

Our subsidiary bank is required to maintain reserve balances with the Federal Reserve Bank.  The required reserve balance was $1,992,000 at December 31, 2019.

Our bank subsidiary, Summit Community Bank, Inc. (“Summit Community”), is subject to various regulatory capital requirements administered by the banking regulatory agencies. Under the capital adequacy guidelines and the regulatory framework for prompt corrective action, Summit Community must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.  Our bank subsidiary’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require Summit Community to maintain minimum amounts and ratios of Common Equity Tier 1("CET1"), Total capital and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).  We believe, as of December 31, 2019, that our bank subsidiary met all capital adequacy requirements to which they were subject.

The most recent notifications from the banking regulatory agencies categorized Summit Community as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, Summit Community must maintain minimum CET1, Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table below.

In December 2018, the federal bank regulatory agencies approved a final rule modifying their regulatory capital rules to provide an option to phase-in over a period of three years the day-one regulatory capital effects of the implementation of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. We intend to elect to this optional phase-in period upon adoption of the ASU effective January 1, 2020. 

The following tables present Summit's, as well as Summit Community's, actual and required minimum regulatory capital amounts and ratios as of December 31, 2019 and December 31, 2018. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended.

	Actual				Minimum Required Capital - Basel III Fully Phased-in			Minimum Required To Be Well Capitalized
Dollars in thousands	Amount		Ratio		Amount	Ratio		Amount	Ratio
As of December 31, 2019
CET1 (to risk weighted assets)
Summit	$	224,679	11.1	%	N/A	N/A		N/A	N/A
Summit Community	244,045		12.1	%	141,183	7.0	%	131,099	6.5	%
Tier I Capital (to risk weighted assets)
Summit	243,679		12.1	%	N/A	N/A		N/A	N/A
Summit Community	244,045		12.1	%	171,437	8.5	%	161,352	8.0	%
Total Capital (to risk weighted assets)
Summit	256,753		12.7	%	N/A	N/A		N/A	N/A
Summit Community	257,119		12.7	%	212,579	10.5	%	202,456	10.0	%
Tier I Capital (to average assets)
Summit	243,679		10.5	%	N/A	N/A		N/A	N/A
Summit Community	244,045		10.6	%	92,092	4.0	%	115,116	5.0	%
As of December 31, 2018
CET1 (to risk weighted assets)
Summit	197,551		11.1	%	N/A	N/A		N/A	N/A
Summit Community	213,930		12.0	%	124,793	7.0	%	115,879	6.5	%
Tier I Capital (to risk weighted assets)
Summit	216,551		12.2	%	N/A	N/A		N/A	N/A
Summit Community	213,930		12.0	%	151,534	8.5	%	142,620	8.0	%
Total Capital (to risk weighted assets)
Summit	229,598		12.9	%	N/A	N/A		N/A	N/A
Summit Community	226,977		12.8	%	186,192	10.5	%	177,326	10.0	%
Tier I Capital (to average assets)
Summit	216,551		10.1	%	N/A	N/A		N/A	N/A
Summit Community	213,930		10.0	%	85,572	4.0	%	106,965	5.0	%