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Regulatory Matters
12 Months Ended
Dec. 31, 2016
Regulatory Matters [Abstract]  
Regulatory Matters
Note 12: Regulatory Matters

The Bank is 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’s and the Bank’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 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. Furthermore, the Bank’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

The Bank must give notice to the Federal Reserve Bank of Cleveland prior to declaring a dividend to the Company and is subject to existing regulatory guidance where, in general, a dividend is permissible without regulatory approval if the institution is considered to be “well capitalized” and the dividend does not exceed current year-to-date net income plus the change in retained earnings for the previous two calendar years. For dividends in excess of the above criteria, the Bank must make application to the Federal Reserve Bank of Cleveland and receive approval before declaring a dividend to the Company.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined) to risk-weighted assets (as defined), common equity Tier 1 capital (as defined) to total risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2016, that the Bank met all capital adequacy requirements to which it is subject.

As of December 31, 2016, based on the computations for the call report the Bank is classified as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since December 31, 2016 that management believes have changed the Bank’s capital classification. In addition to the minimum CET1, Tier 1 and total capital ratios, the Bank will be required to maintain a capital conservation buffer consisting of additional CETI capital greater than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends or paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement is being phased in beginning in January 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented in January 2019.

 

Effective January 1, 2015, new regulatory capital requirements commonly referred to as “Basel III” were implemented. Management opted out of the accumulated other comprehensive income treatment under the new requirements, and as such unrealized gains and losses from available-for-sale securities will continue to be excluded from Bank regulatory capital.

 

In addition to the minimum CET1, Tier 1 and total capital ratios, the Bank will be required to maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends or paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement is being phased in beginning in January 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented in January 2019.


The Bank’s actual capital amounts and ratios as of December 31, 2016 and 2015 are presented in the following table.

   Actual   For Capital Adequacy
Purposes
   To Be well Capitalized
Under Prompt
Corrective Action
Provisions
 
   Amount   Ratio   Amount   Ratio   Amount   Ratio 
As of December 31, 2016                        
Tier I Capital to average assets  $38,133    8.5%  $17,850    4.0%  $22,313    5.0%
Tier 1 Common equity capital
     to risk-weighted assets
   38,133    13.0%   13,159    4.5%   19,007    6.5%
Tier I Capital to risk-weighted
     assets
   38,133    13.0%   17,545    6.0%   23,393    8.0%
Total Risk-based capital to
     risk-weighted assets
   41,176    14.1%   23,393    8.0%   29,241    10.0%
                               
As of December 31, 2015                              
Tier I Capital to average assets  $37,524    8.8%  $17,092    4.0%  $21,365    5.0%
Tier 1 Common equity capital
     to risk-weighted assets
   37,524    13.4%   12,645    4.5%   18,265    6.5%
Tier I Capital to risk-weighted
     assets
   37,524    13.4%   16,860    6.0%   22,480    8.0%
Total Risk-based capital to
     risk-weighted assets
   40,361    14.4%   22,480    8.0%   28,099    10.0%