Note 14 - Regulatory Capital

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

14.

Regulatory Capital

The federal banking agencies have substantially amended the regulatory risk-based capital rules applicable to the Bank. The amendments implemented the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The amended rules included new minimum risk-based capital and leverage ratios, which became effective in

January

2015,

with certain requirements phased in during

2016,

and refined the definition of what constitutes “capital” for purposes of calculating those ratios.

The new minimum capital level requirements applicable to the Bank include: (i) a new common equity Tier

1

risk-based capital ratio of

4.5%;

(ii) a Tier

1

risk-based capital ratio of

6%

(increased from

4%);

(iii) a total risk-based capital ratio of

8%

(unchanged from prior rules); and (iv) a Tier

1

leverage ratio of

4%

for all institutions. The amended rules also establish a “capital conservation buffer” of

2.5%

above the new regulatory minimum capital ratios, and would result in the following minimum ratios: (i) a common equity Tier

1

risk-based capital ratio of

7.0%;

(ii) a Tier

1

risk-based capital ratio of

8.5%;

and (iii) a total risk-based capital ratio of

10.5%.

The capital conservation buffer requirement for

2016

was

0.625%

of risk-weighted assets and will increase each year until fully implemented in

January

2019.

An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that could be utilized for such actions.

As of

December

31,

2016,

the Bank continues to be categorized as “well-capitalized” under the prompt corrective action regulations and continues to exceed all regulatory capital requirements. The Bank had a capital conservation buffer of

6.64%

at

December

31,

2016.

Set forth below is a summary of the Bank’s compliance with banking regulatory capital standards.

	December 31, 2016					December 31, 2015
			Percent of					Percent of
	Amount		Assets			Amount		Assets
	(Dollars in thousands)
Tier I (leverage) capital:
Capital level	$	607,033		10.12	%	$	494,690		8.89	%
Requirement to be well capitalized		299,848		5.00			278,175		5.00
Excess		307,185		5.12			216,515		3.89
Common Equity Tier I risk-based capital:
Capital level	$	607,033		14.12	%	$	494,690		12.62	%
Requirement to be well capitalized		279,443		6.50			254,768		6.50
Excess		327,590		7.62			239,922		6.12
Tier I risk-based capital:
Capital level	$	607,033		14.12	%	$	494,690		12.62	%
Requirement to be well capitalized		343,930		8.00			313,560		8.00
Excess		263,103		6.12			181,130		4.62
Total risk-based capital:
Capital level	$	629,262		14.64	%	$	516,226		13.17	%
Requirement to be well capitalized		429,913		10.00			391,950		10.00
Excess		199,349		4.64			124,276		3.17

The Holding Company is subject to the same regulatory capital requirements as the Bank. As of

December

31,

2016,

the Holding Company continues to be categorized as “well-capitalized” under the prompt corrective action regulations and continues to exceed all regulatory capital requirements. The Holding Company had a capital conservation buffer of

6.56%

at

December

31,

2016.

Set forth below is a summary of the Holding Company’s compliance with banking regulatory capital standards.

	December 31, 2016					December 31, 2015
			Percent of					Percent of
	Amount		Assets			Amount		Assets
	(Dollars in thousands)
Tier I (leverage) capital:
Capital level	$	539,228		9.00	%	$	490,919		8.84	%
Requirement to be well capitalized		299,654		5.00			277,611		5.00
Excess		239,574		4.00			213,308		3.84
Common Equity Tier I risk-based capital:
Capital level	$	506,432		11.79	%	$	462,883		11.83	%
Requirement to be well capitalized		279,121		6.50			254,335		6.50
Excess		227,311		5.29			208,548		5.33
Tier I risk-based capital:
Capital level	$	539,228		12.56	%	$	490,919		12.55	%
Requirement to be well capitalized		343,534		8.00			313,028		8.00
Excess		195,694		4.56			177,891		4.55
Total risk-based capital:
Capital level	$	636,457		14.82	%	$	512,454		13.10	%
Requirement to be well capitalized		429,417		10.00			391,285		10.00
Excess		207,040		4.82			121,169		3.10