Note 7 - Regulatory Capital Requirements

9 Months Ended

Sep. 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

September 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

September 30, 2017

and

December 31, 2016

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

September 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 September 30, 2017:
Company:
Total risk-based capital	$	356,559		11.49	%	$	248,360	>	8.00	%	$	287,166	>	9.250	%	$	310,450	>	10.00	%
Tier 1 risk-based capital		321,213		10.35	%		186,270	>	6.00			225,076	>	7.250			248,360	>	8.00
Tier 1 leverage		321,213		9.23	%		139,146	>	4.00			139,146	>	4.000			173,932	>	5.00
Common equity Tier 1		289,612		9.33	%		139,703	>	4.50			178,509	>	5.750			201,793	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	152,635		12.25	%	$	99,693	>	8.00	%	$	115,270	>	9.250	%	$	124,616	>	10.00	%
Tier 1 risk-based capital		138,453		11.11	%		74,770	>	6.00			90,347	>	7.250			99,693	>	8.00
Tier 1 leverage		138,453		9.40	%		58,913	>	4.00			58,913	>	4.000			73,642	>	5.00
Common equity Tier 1		138,453		11.11	%		56,077	>	4.50			71,654	>	5.750			81,001	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	114,234		12.16	%	$	75,150	>	8.00	%	$	86,893	>	9.250	%	$	93,938	>	10.00	%
Tier 1 risk-based capital		102,545		10.92	%		56,363	>	6.00			68,105	>	7.250			75,150	>	8.00
Tier 1 leverage		102,545		10.27	%		39,950	>	4.00			39,950	>	4.000			49,938	>	5.00
Common equity Tier 1		102,545		10.92	%		42,272	>	4.50			54,014	>	5.750			61,060	>	6.50
Community State Bank:
Total risk-based capital	$	67,071		12.83	%	$	41,837	>	8.00	%	$	48,374	>	9.250	%	$	52,296	>	10.00	%
Tier 1 risk-based capital		63,356		12.11	%		31,378	>	6.00			37,915	>	7.250			41,837	>	8.00
Tier 1 leverage		63,356		10.14	%		24,991	>	4.00			24,991	>	4.000			31,239	>	5.00
Common equity Tier 1		63,356		12.11	%		23,533	>	4.50			30,070	>	5.750			33,992	>	6.50
Rockford Bank & Trust:
Total risk-based capital	$	45,031		11.48	%	$	31,394	>	8.00	%	$	36,299	>	9.250	%	$	39,243	>	10.00	%
Tier 1 risk-based capital		40,120		10.22	%		23,546	>	6.00			28,451	>	7.250			31,394	>	8.00
Tier 1 leverage		40,120		9.26	%		17,328	>	4.00			17,328	>	4.000			21,660	>	5.00
Common equity Tier 1		40,120		10.22	%		17,659	>	4.50			22,564	>	5.750			25,508	>	6.50

											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	>	8.00	%	$	244,289	>	8.625	%	$	283,233	>	10.00	%
Tier 1 risk-based capital		296,366		10.46	%		169,940	>	6.00			187,642	>	6.625			226,587	>	8.00
Tier 1 leverage		296,366		9.10	%		130,229	>	4.00			130,229	>	4.000			162,787	>	5.00
Common equity Tier 1		266,419		9.41	%		127,455	>	4.50			145,157	>	5.125			184,102	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	142,990		12.27	%	$	93,212	>	8.00	%	$	100,494	>	8.625	%	$	116,515	>	10.00	%
Tier 1 risk-based capital		129,524		11.12	%		69,909	>	6.00			77,191	>	6.625			93,212	>	8.00
Tier 1 leverage		129,524		9.18	%		56,445	>	4.00			56,445	>	4.000			70,556	>	5.00
Common equity Tier 1		129,524		11.12	%		52,432	>	4.50			59,714	>	5.125			75,735	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	106,791		12.82	%	$	66,623	>	8.00	%	$	71,828	>	8.625	%	$	83,279	>	10.00	%
Tier 1 risk-based capital		96,369		11.57	%		49,968	>	6.00			55,173	>	6.625			66,623	>	8.00
Tier 1 leverage		96,369		10.69	%		36,061	>	4.00			36,061	>	4.000			45,076	>	5.00
Common equity Tier 1		96,369		11.57	%		37,476	>	4.50			42,681	>	5.125			54,132	>	6.50
Community State Bank:
Total risk-based capital	$	68,216		13.81	%	$	39,521	>	8.00	%	$	42,609	>	8.625	%	$	49,402	>	10.00	%
Tier 1 risk-based capital		66,746		13.51	%		29,641	>	6.00			32,729	>	6.625			39,522	>	8.00
Tier 1 leverage		66,746		11.75	%		22,726	>	4.00			22,726	>	4.000			28,408	>	5.00
Common equity Tier 1		66,746		13.51	%		22,231	>	4.50			25,319	>	5.125			32,111	>	6.50
Rockford Bank & Trust:
Total risk-based capital	$	42,007		12.26	%	$	27,410	>	8.00	%	$	29,551	>	8.625	%	$	34,262	>	10.00	%
Tier 1 risk-based capital		37,716		11.01	%		20,558	>	6.00			22,699	>	6.625			27,410	>	8.00
Tier 1 leverage		37,716		9.57	%		15,772	>	4.00			15,772	>	4.000			19,716	>	5.00
Common equity Tier 1		37,716		11.01	%		15,418	>	4.50			17,759	>	5.125			22,270	>	6.50

*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

).