NOTE 10 – 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, 2019 and December 31, 2018, 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, 2019 and December 31, 2018 are presented in the following table (dollars in thousands). As of September 30, 2019 and December 31, 2018, 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, 2019:
Company:
Total risk-based capital	$	567,977	12.22	%	$	371,904	>	8.00	%	$	488,124	>	10.50	%	$	464,880	>	10.00	%
Tier 1 risk-based capital		461,899	9.94			278,928	>	6.00			395,148	>	8.50			371,904	>	8.00
Tier 1 leverage		461,899	9.02			204,868	>	4.00			204,868	>	4.00			256,085	>	5.00
Common equity Tier 1		424,102	9.12			209,196	>	4.50			325,416	>	7.00			302,172	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	177,834	11.72	%	$	121,345	>	8.00	%	$	159,265	>	10.50	%	$	151,681	>	10.00	%
Tier 1 risk-based capital		163,998	10.81			91,009	>	6.00			128,929	>	8.50			121,345	>	8.00
Tier 1 leverage		163,998	9.85			66,604	>	4.00			66,604	>	4.00			83,255	>	5.00
Common equity Tier 1		163,998	10.81			68,257	>	4.50			106,177	>	7.00			98,593	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	168,158	11.64	%	$	115,524	>	8.00	%	$	151,625	>	10.50	%	$	144,405	>	10.00	%
Tier 1 risk-based capital		154,769	10.72			86,643	>	6.00			122,744	>	8.50			115,524	>	8.00
Tier 1 leverage		154,769	9.99			61,993	>	4.00			61,993	>	4.00			77,491	>	5.00
Common equity Tier 1		154,769	10.72			64,982	>	4.50			101,083	>	7.00			93,863	>	6.50
Community State Bank:
Total risk-based capital	$	89,088	12.92	%	$	55,147	>	8.00	%	$	72,380	>	10.50	%	$	68,933	>	10.00	%
Tier 1 risk-based capital		82,399	11.95			41,360	>	6.00			58,593	>	8.50			55,147	>	8.00
Tier 1 leverage		82,399	10.35			31,846	>	4.00			31,846	>	4.00			39,808	>	5.00
Common equity Tier 1		82,399	11.95			31,020	>	4.50			48,253	>	7.00			44,807	>	6.50
Springfield First Community Bank:
Total risk-based capital	$	68,371	13.16	%	$	41,561	>	8.00	%	$	54,549	>	10.50	%	$	51,951	>	10.00	%
Tier 1 risk-based capital		61,328	11.80			31,171	>	6.00			44,159	>	8.50			41,561	>	8.00
Tier 1 leverage		61,328	9.67			25,375	>	4.00			25,375	>	4.00			31,719	>	5.00
Common equity Tier 1		61,328	11.80			23,378	>	4.50			36,366	>	7.00			33,768	>	6.50

* September 30, 2019 minimums reflect the fully phased-in ratios (including the capital conservation buffer).


										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, 2018:
Company:
Total risk-based capital	$	460,416	10.69	%	$	344,551	>	8.00	%	$	425,305	>	9.875	%	$	430,689	>	10.00	%
Tier 1 risk-based capital		420,569	9.77			258,413	>	6.00			339,168	>	7.875			344,551	>	8.00
Tier 1 leverage		420,569	8.87			189,858	>	4.00			189,858	>	4.000			237,322	>	5.00
Common equity Tier 1		382,899	8.89			193,810	>	4.50			274,564	>	6.375			279,948	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	162,009	11.38	%	$	113,900	>	8.00	%	$	140,596	>	9.875	%	$	142,376	>	10.00	%
Tier 1 risk-based capital		148,529	10.43			85,425	>	6.00			112,121	>	7.875			113,900	>	8.00
Tier 1 leverage		148,529	9.04			65,744	>	4.00			65,744	>	4.000			82,180	>	5.00
Common equity Tier 1		148,529	10.43			64,069	>	4.50			90,764	>	6.375			92,544	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	146,292	11.55	%	$	101,310	>	8.00	%	$	125,054	>	9.875	%	$	126,637	>	10.00	%
Tier 1 risk-based capital		133,982	10.58			75,982	>	6.00			99,727	>	7.875			101,310	>	8.00
Tier 1 leverage		133,982	9.98			53,682	>	4.00			53,682	>	4.000			67,103	>	5.00
Common equity Tier 1		133,982	10.58			56,987	>	4.50			80,731	>	6.375			82,314	>	6.50
Community State Bank:
Total risk-based capital	$	75,233	11.24	%	$	53,567	>	8.00	%	$	66,122	>	9.875	%	$	66,959	>	10.00	%
Tier 1 risk-based capital		69,101	10.32			40,175	>	6.00			52,730	>	7.875			53,567	>	8.00
Tier 1 leverage		69,101	9.19			30,070	>	4.00			30,070	>	4.000			37,588	>	5.00
Common equity Tier 1		69,101	10.32			30,131	>	4.50			42,686	>	6.375			43,523	>	6.50
Springfield First Community Bank:
Total risk-based capital	$	57,051	12.24	%	$	37,278	>	8.00	%	$	46,016	>	9.875	%	$	46,598	>	10.00	%
Tier 1 risk-based capital		51,279	11.00			27,959	>	6.00			36,696	>	7.875			37,278	>	8.00
Tier 1 leverage		51,279	9.39			21,849	>	4.00			21,849	>	4.000			27,312	>	5.00
Common equity Tier 1		51,279	11.00			20,969	>	4.50			29,706	>	6.375			30,289	>	6.50
Rockford Bank & Trust
Total risk-based capital	$	50,648	10.89	%	$	37,208	>	8.00	%	$	45,929	>	9.875	%	$	46,511	>	10.00	%
Tier 1 risk-based capital		44,821	9.64			27,906	>	6.00			36,627	>	7.875			37,208	>	8.00
Tier 1 leverage		44,821	8.93			20,081	>	4.00			20,081	>	4.000			25,101	>	5.00
Common equity Tier 1		44,821	9.64			20,930	>	4.50			29,650	>	6.375			30,232	>	6.50