Note 23 - Regulatory Matters

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

(

23

) Regulatory Matters

Bancorp and the Bank are subject to various capital requirements prescribed by banking regulations and administered by state and federal banking agencies. Under these requirements, Bancorp and the Bank must meet minimum amounts and percentages of Tier

1,

common equity Tier

1,

and total capital, as defined, to risk weighted assets and Tier

1

capital to average assets. Risk weighted assets are determined by applying certain risk weightings prescribed by the regulations to various categories of assets and off-balance sheet commitments. Capital and risk weighted assets

may

be further subject to qualitative judgments by regulators as to components, risk weighting and other factors. Failure to meet the capital requirements can result in certain mandatory, and possibly discretionary, corrective actions prescribed by the regulations or determined to be necessary by the regulators, which could materially affect the unaudited consolidated financial statements.

In

2013,

the Federal Reserve Board and the FDIC approved rules that substantially amended the regulatory risk-based capital rules applicable to Bancorp and Bank. The rules implemented the regulatory capital reforms of the Basel Committee on Banking Supervision reflected in

“Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” (“Basel III”) and changes required by the Dodd-Frank Act. The Basel III regulatory capital reforms became effective for Bancorp and Bank on

January 1, 2015,

and included new minimum risk-based capital and leverage ratios. For Bancorp, key differences under Basel III include risk weighting for loan commitments under

one

year and higher risk weighting for certain commercial real estate and construction loans. These differences resulted in higher risk-weighted assets, and therefore, somewhat lower risk-based capital ratios. Bancorp and the Bank met all capital requirements to which they were subject as of

December 31, 2017

and

2016.

The following table sets forth consolidated Bancorp

’s and the Bank’s risk based capital amounts and ratios as of

December 31, 2017

and

2016

follows:

(Dollars in thousands)	Actual					Minimum for adequately capitalized					Minimum for well capitalized
December 31, 2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital
Consolidated	$	359,866		13.52	%	$	213,012		8.0	%		NA		NA
Bank		347,840		13.07			212,891		8.0		$	266,114		10.0	%
Common Equity Tier 1 risk-based capital
Consolidated		334,631		12.57			119,820		4.5			NA		NA
Bank		322,605		12.12			212,891		4.5			172,974		6.5
Tier 1 risk-based capital
Consolidated		334,631		12.57			159,760		6.0			NA		NA
Bank		322,605		12.12			159,668		6.0			212,891		8.0
Leverage ( 1)
Consolidated		334,631		10.70			125,122		4.0			NA		NA
Bank		322,605		10.32			125,040		4.0			156,300		5.0

	Actual					Minimum for adequately capitalized					Minimum for well capitalized
December 31, 2016	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital
Consolidated	$	338,525		13.04	%	$	207,684		8.0	%		NA		NA
Bank		325,630		12.57			207,243		8.0		$	258,986		10.0	%
Common Equity Tier 1 risk-based capital
Consolidated		314,147		12.10			116,832		4.5			NA		NA
Bank		301,252		11.63			116,564		4.5			168,341		6.5
Tier 1 risk-based capital
Consolidated		314,147		12.10			155,775		6.0			NA		NA
Bank		301,252		11.63			155,418		6.0			207,189		8.0
Leverage ( 1)
Consolidated		314,147		10.54			119,221		4.0			NA		NA
Bank		301,252		10.11			119,190		4.0			148,927		5.0

Ratio is computed in relation to risk-weighted assets.

(

1

)     Ratio is computed in relation to average assets.

NA

–

Not

applicable. Regulatory framework does

not

define well capitalized for holding companies.