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Note 15 - Regulatory Capital Requirements
12 Months Ended
Dec. 31, 2015
Disclosure Text Block [Abstract]  
Regulatory Capital Requirements under Banking Regulations [Text Block]

15. REGULATORY CAPITAL REQUIREMENTS


Dividend payments made by the Company are subject to regulatory restrictions under Federal Reserve Board policy as well as to limitations under applicable provisions of Virginia corporate law. The Federal Reserve Board may prohibit a bank holding company from paying any dividends if the holding company's bank subsidiary is classified as "undercapitalized." Under Virginia law, dividends may be paid out of surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Furthermore, under FDIC regulations, the Bank is prohibited from making any capital distributions if, after making the distribution, the Bank’s capital ratios would be below the level necessary to categorize the Bank as “adequately capitalized” under the FDIC’s prompt corrective action regulations.


The Company is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial condition and results of operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about component risk weightings and other factors. At December 31, 2015 and 2014 the Company’s and the Bank’s Tier 1 and total capital ratios and their Tier 1 leverage ratios exceeded minimum requirements.


In July 2013, the Federal Reserve Board approved and published the final Basel III Capital Rules establishing a new comprehensive capital framework for U.S. banking organizations. The Basel III Capital Rules, among other things, (i) introduce CET1 as a new capital measure, (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. The Basel III Capital Rules were effective for BNC and the Company on January 1, 2015 (subject to a phase-in period for certain components). CET1 capital for the Company and BNC consists of common stock, related paid-in capital, and retained earnings. In connection with the adoption of the Basel III Capital Rules, we elected to opt-out of the requirement to include most components of accumulated other comprehensive income in CET1. CET1 for both the Company and BNC is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities and subject to transition provisions.


Basel III limits capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.50% of CET1 capital, Tier 1 capital and total capital to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. The capital conservation buffer will be phased in beginning January 1, 2016, at 0.625% of risk-weighted assets, increasing each year until fully implemented at 2.50% on January 1, 2019. When fully phased in on January 1, 2019, Basel III will require (i) a minimum ratio of CET1 capital to risk-weighted assets of at least 4.50% , plus a 2.50% capital conservation buffer, (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.00% , plus the capital conservation buffer, (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.00% , plus the 2.50% capital conservation buffer and (iv) a minimum leverage ratio of 4.00% .


                   

Minimum for Capital

   

Minimum to be

 
   

Actual

   

Adequacy Purposes

   

Well Capitalized

 
   

Amount

   

Ratio

   

Amount

   

Ratio

   

Amount

   

Ratio

 
   

(Dollars in thousands)

 
December 31, 2015:                                                

Total Capital (to Risk Weighted Assets)

  $ 88,074       13.29 %   $ 53,002       8.00 %   $ 66,253       10.00 %

Tier 1 Capital (to Risk Weighted Assets)

    79,871       12.06 %     39,752       6.00 %     53,002       8.00 %

Common Tier 1 Capital (to Risk Weighted Assets)

    79,871       12.06 %     29,814       4.50 %     43,064       6.50 %

Tier 1 Capital (to Average Assets)

    79,871       8.67 %     36,848       4.00 %     46,060       5.00 %
                                                 

December 31, 2014:

                                               

Total Capital (to Risk Weighted Assets)

  $ 82,670       14.60 %   $ 45,394       8.00 %   $ 56,743       10.00 %

Tier 1 Capital (to Risk Weighted Assets)

    75,568       13.30 %     22,697       4.00 %     34,046       6.00 %

Tier 1 Capital (to Average Assets)

    75,568       9.70 %     31,748       4.00 %     39,685       5.00 %

As of December 31, 2015, the most recent report filing date with the FDIC, the Bank’s regulatory capital position is categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum amounts and ratios, as set forth in the table above. There are no conditions or events since December 31, 2015, that management believes has changed the Bank's well capitalized category.