CAPITAL REQUIREMENTS

12 Months Ended

Dec. 31, 2017

CAPITAL REQUIREMENTS

CAPITAL REQUIREMENTS

NOTE 19 - CAPITAL REQUIREMENTS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and possible 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 Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  The Company and Bank capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for US banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019.  Under the Basell III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios.  The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019.  The capital conservation buffer for 2017 is 1.25% and was 0.625% for 2016.  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, the Company and the Bank meet all capital adequacy requirements to which they are subject.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital to average assets (as defined).  Management believes, as of December 31, 2017 and 2016, that the Bank meets all capital adequacy requirements to which they are subject.

The most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following table.  There are no conditions or events since that notification that management believes have changed the institution’s category.

The Company’s and the Bank’s actual amounts and ratios, exclusive of the capital conservation buffer, are presented in the table below:

									To Be Well
									Capitalized
									Under Prompt
					For Capital				Corrective
	Actual				Adequacy Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2017
Consolidated
Total Capital (to Risk-Weighted Assets)	$	101,896	14.9	%	$	54,599	8.0	%		N/A	N/A
Tier I Capital (to Risk-Weighted Assets)		94,092	13.8			40,949	6.0			N/A	N/A
Common Equity Tier 1 Capital (to Risk-Weighted Assets)		87,092	12.8			30,712	4.5			N/A	N/A
Tier I Capital (to Average Assets)		94,092	9.2			40,754	4.0			N/A	N/A
Bank Only
Total Capital (to Risk-Weighted Assets)	$	99,688	14.6	%	$	54,581	8.0	%	$	68,226	10.0	%
Tier I Capital (to Risk-Weighted Assets)		91,884	13.5			40,936	6.0			54,581	8.0
Common Equity Tier 1 Capital (to Risk-Weighted Assets)		91,884	13.5			30,702	4.5			44,347	6.5
Tier I Capital (to Average Assets)		91,884	9.0			40,669	4.0			50,836	5.0
December 31, 2016
Consolidated
Total Capital (to Risk-Weighted Assets)	$	94,343	13.9	%	$	54,280	8.0	%		N/A	N/A
Tier I Capital (to Risk-Weighted Assets)		86,718	12.8			40,710	6.0			N/A	N/A
Common Equity Tier 1 Capital (to Risk-Weighted Assets)		79,718	11.8			30,533	4.5			N/A	N/A
Tier I Capital (to Average Assets)		86,718	8.7			39,795	4.0			N/A	N/A
Bank Only
Total Capital (to Risk-Weighted Assets)	$	95,118	14.0	%	$	54,246	8.0	%	$	67,808	10.0	%
Tier I Capital (to Risk-Weighted Assets)		87,493	12.9			40,685	6.0			54,246	8.0
Common Equity Tier 1 Capital (to Risk-Weighted Assets)		87,493	12.9			30,513	4.5			44,075	6.5
Tier I Capital (to Average Assets)		87,493	8.8			39,671	4.0			49,588	5.0