Note 7 - Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE

7

– REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) 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 and subsidiary banks

’ financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks 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 the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier

1

and Tier

1

capital to risk-weighted assets and of Tier

1

capital to average assets, each as defined by regulation. Management believes, as of

June 30, 2017

and

December 31, 2016,

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

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, Tier

1

leverage and common equity Tier

1

ratios as set forth in the following tables. The Company and the subsidiary banks

’ actual capital amounts and ratios as of

June 30, 2017

and

December 31, 2016

are also presented in the following table (dollars in thousands). As of

June 30, 2017

and

December 31, 2016,

each of the subsidiary banks met the requirements to be “well capitalized”.

											For Capital					To Be Well
											Adequacy Purposes					Capitalized Under
						For Capital					With Capital					Prompt Corrective
	Actual					Adequacy Purposes					Conservation Buffer*					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2017:
Company:
Total risk-based capital	$	347,033		11.65	%	$	238,402	>	8.000	%	$	275,652	>	9.25	%	$	298,003	>	10.0	%
Tier 1 risk-based capital		313,333		10.51	%		178,802	>	6.000			216,052	>	7.25			238,402	>	8.0
Tier 1 leverage		313,333		9.34	%		134,142	>	4.000			134,142	>	4.00			167,677	>	5.0
Common equity Tier 1		281,774		9.46	%		134,101	>	4.500			171,352	>	5.75			193,702	>	6.5
Quad City Bank & Trust:
Total risk-based capital	$	149,008		12.59	%	$	94,717	>	8.000	%	$	109,516	>	9.25	%	$	118,396	>	10.0	%
Tier 1 risk-based capital		135,628		11.46	%		71,038	>	6.000			85,837	>	7.25			94,717	>	8.0
Tier 1 leverage		135,628		9.56	%		56,719	>	4.000			56,719	>	4.00			70,898	>	5.0
Common equity Tier 1		135,628		11.46	%		53,278	>	4.500			68,078	>	5.75			76,957	>	6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	110,561		12.19	%	$	72,578	>	8.000	%	$	83,918	>	9.25	%	$	90,722	>	10.0	%
Tier 1 risk-based capital		99,216		10.94	%		54,434	>	6.000			65,774	>	7.25			72,578	>	8.0
Tier 1 leverage		99,216		10.43	%		38,044	>	4.000			38,044	>	4.00			47,555	>	5.0
Common equity Tier 1		99,216		10.94	%		40,825	>	4.500			52,165	>	5.75			58,969	>	6.5
Community State Bank:
Total risk-based capital	$	69,222		13.32	%	$	41,577	>	8.000	%	$	48,074	>	9.25	%	$	51,972	>	10.0	%
Tier 1 risk-based capital		66,089		12.72	%		31,183	>	6.000			37,679	>	7.25			41,577	>	8.0
Tier 1 leverage		66,089		10.91	%		24,231	>	4.000			24,231	>	4.00			30,289	>	5.0
Common equity Tier 1		66,089		12.72	%		23,387	>	4.500			29,884	>	5.75			33,782	>	6.5
Rockford Bank & Trust
Total risk-based capital	$	44,068		11.78	%	$	29,922	>	8.000	%	$	34,598	>	9.25	%	$	37,403	>	10.0	%
Tier 1 risk-based capital		39,384		10.53	%		22,442	>	6.000			27,117	>	7.25			29,922	>	8.0
Tier 1 leverage		39,384		9.63	%		16,354	>	4.000			16,354	>	4.00			20,442	>	5.0
Common equity Tier 1		39,384		10.53	%		16,831	>	4.500			21,507	>	5.75			24,312	>	6.5

											For Capital					To Be Well
											Adequacy Purposes					Capitalized Under
						For Capital					With Capital					Prompt Corrective
	Actual					Adequacy Purposes					Conservation Buffer*					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2016:
Company:
Total risk-based capital	$	327,440		11.56	%	$	226,587	>	8.000	%	$	244,289	>	8.625	%	$	283,233	>	10.0	%
Tier 1 risk-based capital		296,366		10.46	%		169,940	>	6.000			187,642	>	6.625			226,587	>	8.0
Tier 1 leverage		296,366		9.10	%		130,229	>	4.000			130,229	>	4.000			162,787	>	5.0
Common equity Tier 1		266,419		9.41	%		127,455	>	4.500			145,157	>	5.125			184,102	>	6.5
Quad City Bank & Trust:
Total risk-based capital	$	142,990		12.27	%	$	93,212	>	8.000	%	$	100,494	>	8.625	%	$	116,515	>	10.0	%
Tier 1 risk-based capital		129,524		11.12	%		69,909	>	6.000			77,191	>	6.625			93,212	>	8.0
Tier 1 leverage		129,524		9.18	%		56,445	>	4.000			56,445	>	4.000			70,556	>	5.0
Common equity Tier 1		129,524		11.12	%		52,432	>	4.500			59,714	>	5.125			75,735	>	6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	106,791		12.82	%	$	66,623	>	8.000	%	$	71,828	>	8.625	%	$	83,279	>	10.0	%
Tier 1 risk-based capital		96,369		11.57	%		49,968	>	6.000			55,173	>	6.625			66,623	>	8.0
Tier 1 leverage		96,369		10.69	%		36,061	>	4.000			36,061	>	4.000			45,076	>	5.0
Common equity Tier 1		96,369		11.57	%		37,476	>	4.500			42,681	>	5.125			54,132	>	6.5
Community State Bank:
Total risk-based capital	$	68,216		13.81	%	$	39,521	>	8.000	%	$	42,609	>	8.625	%	$	49,402	>	10.0	%
Tier 1 risk-based capital		66,746		13.51	%		29,641	>	6.000			32,729	>	6.625			39,522	>	8.0
Tier 1 leverage		66,746		11.75	%		22,726	>	4.000			22,726	>	4.000			28,408	>	5.0
Common equity Tier 1		66,746		13.51	%		22,231	>	4.500			25,319	>	5.125			32,111	>	6.5
Rockford Bank & Trust:
Total risk-based capital	$	42,007		12.26	%	$	27,410	>	8.000	%	$	29,551	>	8.625	%	$	34,262	>	10.0	%
Tier 1 risk-based capital		37,716		11.01	%		20,558	>	6.000			22,699	>	6.625			27,410	>	8.0
Tier 1 leverage		37,716		9.57	%		15,772	>	4.000			15,772	>	4.000			19,716	>	5.0
Common equity Tier 1		37,716		11.01	%		15,418	>	4.500			17,559	>	5.125			22,270	>	6.5

*The minimums under Basel III increase by

.625%

(the capital conservation buffer) annually until

2019.

  The fully phased-in minimums are 

10.5%

(Total risk-based capital),

8.5%

(Tier

1

risk-based capital), and

7.0%

(Common equity Tier

1

).