Note 21 - Regulatory Requirements and Restrictions

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note

2

1

.

Regulatory Requirements

and Restrictions

The Company and the Bank are subject to various regulatory capital requirements administered by state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under the capital adequacy guidelines and the regulatory framework for prompt corrective action, which applies only to the Bank, the Bank must meet specific capital guidelines that involve quantitative measures of the entity’s balance sheet assets and off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. In addition, the Company and the Bank are subject to various regulatory restrictions related to the payment of dividends, including requirements to maintain capital at or above regulatory minimums.

The current risk-based capital requirements, based on the international capital standards known as Basel III, requires the Company and the Bank to maintain minimum amounts and ratios of Common Equity Tier

1

capital, Tier

1

capital, and total capital to risk-weighted assets, and of Tier

1

capital to average consolidated assets (“Tier

1

leverage ratio”), as defined in the regulations. On

January 1, 2016,

Basel III’s capital conservation buffer (“CCB”), which is intended to absorb losses during periods of economic stress, became effective at

0.625%,

and was phased in over a

four

-year period (increased an additional

0.625%

each year until it reached

2.5%

on

January 1, 2019).

The following tables present actual and required capital ratios, under Basel III capital rules, as of the dates indicated:

	December 31, 2019
	Actual					Minimum Basel III Requirement					Minimum Basel III Requirement - with CCB					Well Capitalized Requirement (1)
(Amounts in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
The Company
Common equity Tier 1 ratio	$	292,241		14.31	%	$	91,926		4.50	%	$	142,996		7.00	%		N/A		N/A
Tier 1 risk-based capital ratio		292,241		14.31	%		122,568		6.00	%		173,637		8.50	%		N/A		N/A
Total risk-based capital ratio		310,732		15.21	%		163,423		8.00	%		214,493		10.50	%		N/A		N/A
Tier 1 Leverage ratio		292,241		14.01	%		83,408		4.00	%		N/A		N/A			N/A		N/A
The Bank
Common equity Tier 1 ratio	$	262,716		12.87	%	$	91,860		4.50	%	$	142,893		7.00	%	$	132,686		6.50	%
Tier 1 risk-based capital ratio		262,716		12.87	%		122,480		6.00	%		173,513		8.50	%		163,306		8.00	%
Total risk-based capital ratio		281,207		13.78	%		163,306		8.00	%		214,339		10.50	%		204,133		10.00	%
Tier 1 Leverage ratio		262,716		12.61	%		83,313		4.00	%		N/A		N/A			104,141		5.00	%

( 1 ) Based on prompt corrective action provisions

	December 31, 2018
	Actual					Minimum Basel III Requirement					Minimum Basel III Requirement - with CCB					Well Capitalized Requirement (1)
(Amounts in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
The Company
Common equity Tier 1 ratio	$	236,544		13.72	%	$	77,570		4.50	%	$	120,664		6.375	%		N/A		N/A
Tier 1 risk-based capital ratio		236,544		13.72	%		103,427		6.00	%		146,521		7.875	%		N/A		N/A
Total risk-based capital ratio		254,877		14.79	%		137,902		8.00	%		180,997		9.875	%		N/A		N/A
Tier 1 Leverage ratio		236,544		10.95	%		86,439		4.00	%		N/A		N/A			N/A		N/A
The Bank
Common equity Tier 1 ratio	$	215,424		12.55	%	$	77,223		4.50	%	$	120,124		6.375	%	$	111,544		6.50	%
Tier 1 risk-based capital ratio		215,424		12.55	%		102,964		6.00	%		145,865		7.875	%		137,285		8.00	%
Total risk-based capital ratio		233,757		13.62	%		137,285		8.00	%		180,186		9.875	%		171,606		10.00	%
Tier 1 Leverage ratio		215,424		9.98	%		86,376		4.00	%		N/A		N/A			107,970		5.00	%

( 1 ) Based on prompt corrective action provisions