NOTE 21 - STOCKHOLDERS' EQUITY

The Company's principal source of funds for dividend payments to shareholders is dividends received from the subsidiary Banks. 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 profits, as defined, combined with the retained net profits of the preceding two years, subject to the capital requirements and additional restrictions as discussed below. During 2018 the Banks could, without prior approval, declare dividends to the Company of approximately $7.7 million plus any 2018 net profits retained to the date of the dividend declaration.

The Company and the subsidiary Banks are subject to various regulatory capital requirements administered by the 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 financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Banks must meet specific guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.

These quantitative measures established by regulation to ensure capital adequacy require the Company and Banks to maintain minimum amounts and ratios (set forth in the following tables). The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks (Basel III rules) became effective for the Company and Banks on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule by January 1, 2019. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes, as of December 31, 2017, that the Company and the Banks meet all quantitative capital adequacy requirements to which they are subject.

The Company's and the subsidiary Banks' capital amounts and ratios as of December 31, 2017 are presented in the table below.

											To Be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes ⁽¹⁾					Action Provisions
2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to risk-weighted assets):
Consolidated ⁽²⁾	$	168,072		15.6	%	$	86,401		8	%	$	108,001		10	%
Premier Bank, Inc.		123,444		15.4			64,300		8			80,375		10
Citizens Deposit Bank		40,839		14.8			22,078		8			27,598		10

Tier I Capital (to risk-weighted assets):
Consolidated ⁽²⁾	$	155,968		14.4	%	$	64,800		6	%	$	86,401		8	%
Premier Bank, Inc.		113,938		14.2			48,225		6			64,300		8
Citizens Deposit Bank		38,241		13.9			16,559		6			22,078		8

Common Equity Tier I Capital (to risk-weighted assets):
Consolidated ⁽²⁾	$	150,069		13.9	%	$	48,600		4.5	%	$	70,201		6.5	%
Premier Bank, Inc.		113,938		14.2			36,169		4.5			52,244		6.5
Citizens Deposit Bank		38,241		13.9			12,419		4.5			17,939		6.5

Tier I Capital (to average assets):
Consolidated ⁽²⁾	$	155,968		10.7	%	$	58,484		4	%	$	73,106		5	%
Premier Bank, Inc.		113,938		11.0			41,618		4			52,022		5
Citizens Deposit Bank		38,241		9.0			16,947		4			21,183		5

⁽¹⁾ The ratios for capital adequacy purposes do not include the additional capital conservation buffer.

⁽²⁾ The consolidated company is not subject to Prompt Corrective Action Provisions.

Beginning on January 1, 2016 an additional capital conservation buffer has been added to the minimum regulatory capital ratios under the regulatory framework for prompt corrective action. The capital conservation buffer will be measured as a percentage of risk weighted assets and will be phased-in over a four year period from 2016 thru 2019, resulting in a required capital conservation buffer of 0.625% in 2016 and 1.25% in 2017. When fully implemented, the capital conservation buffer will be 2.50% of risk weighted assets over and above the regulatory minimum capital ratios for Common Equity Tier 1 Capital (CET1) to risk-weighted assets, Tier 1 Capital to risk-weighted assets, and Total Capital to risk-weighted assets. The consequences of not meeting the capital conservation buffer thresholds include restrictions on the payment of dividends, restrictions on the payment of discretionary bonuses, and restrictions on the repurchasing of common shares by the Company. The capital ratios of the Affiliate Banks and the Company already exceed the new minimum capital ratios plus the fully phased-in 2.50% capital buffer requiring a CET1 Capital to risk-weighted assets ratio of at least 7.00%, a Tier 1 Capital to risk-weighted assets ratio of at least 8.50% and a Total Capital to risk-weighted assets ratio of at least 10.50%. The Company's capital conservation buffer was 7.56% at December 31, 2017 and 6.95% at December 31, 2016, well in excess of the fully phased-in 2.50% required by March 31, 2019.

The Company's and the subsidiary Banks' capital amounts and ratios as of December 31, 2016 are presented in the table below.

											To Be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
2016	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to Risk-Weighted Assets):
Consolidated ⁽¹⁾	$	158,433		15.0	%	$	84,779		8	%	$	105,973		10	%
Premier Bank, Inc.		119,860		15.3			62,720		8			78,400		10
Citizens Deposit Bank		39,725		14.3			22,181		8			27,727		10

Tier I Capital (to Risk-Weighted Assets):
Consolidated ⁽¹⁾	$	147,597		13.9	%	$	63,584		6	%	$	84,779		8	%
Premier Bank, Inc.		111,538		14.2			47,040		6			62,720		8
Citizens Deposit Bank		37,211		13.4			16,636		6			22,181		8

Common Equity Tier I Capital (to Risk-Weighted Assets):
Consolidated ⁽¹⁾	$	142,024		13.4	%	$	47,688		4.5	%	$	68,883		6.5	%
Premier Bank, Inc.		111,538		14.2			35,280		4.5			50,960		6.5
Citizens Deposit Bank		37,211		13.4			12,477		4.5			18,022		6.5

Tier I Capital (to Average Assets):
Consolidated ⁽¹⁾	$	147,597		10.1	%	$	58,420		4	%	$	73,025		5	%
Premier Bank, Inc.		111,538		10.6			42,159		4			52,699		5
Citizens Deposit Bank		37,211		9.1			16,289		4			20,361		5
⁽¹⁾ The consolidated company is not subject to Prompt Corrective Action Provisions.

As of December 31, 2017 and 2016, the most recent notification from each of the Banks' primary Federal regulators categorized the subsidiary Banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum Total risk-based, Tier 1 risk-based, Tier 1 leverage and Common Equity Tier 1 risk-based ratios as set forth in the tables above. There are no conditions or events since that notification that management believes have changed the Banks' categories.