Regulatory Matters

9 Months Ended

Sep. 30, 2017

Regulatory Matters [Abstract]

Regulatory Matters

Note 9: 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 the Bank’s capital 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, or under certain conditions specified by regulation, apply to, the Federal Reserve Bank of Cleveland prior to declaring a dividend to the Company. Under existing regulatory guidance, a dividend is generally 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. An Ohio-chartered savings association must seek advance approval of the Superintendent of the Ohio Division of Financial Institutions before declaring a dividend that would exceed the total of the savings association’s net profits for that year combined with its retained net profits of the preceding two years, less any required transfers to surplus.

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 Tier 1 capital to average assets, of Tier 1 common equity capital to risk-weighted assets, of Tier 1 capital to risk-weighted assets, and of total risk-based capital to risk-weighted assets, all as defined in the regulations. Management believes, as of September 30, 2017, that the Bank met all capital adequacy requirements to which it is subject.

As of September 30, 2017, 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 September 30, 2017, that management believes have changed the Bank’s capital classification.

The Bank’s actual capital amounts and ratios as of September 30, 2017 and December 31, 2016 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 September 30, 2017
Tier 1 capital to average assets	$	39,967		9.0%	$	17,740		4.0%	$	22,174		5.0%
Tier 1 common equity capital to risk-      weighted assets		39,967		12.9%		13,918		4.5%		20,104		6.5%
Tier 1 capital to risk-weighted assets		39,967		12.9%		18,558		6.0%		24,744		8.0%
Total risk-based capital to risk-      weighted assets		43,221		14.0%		24,744		8.0%		30,929		10.0%
As of December 31, 2016
Tier 1 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 1 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%

Effective January 1, 2015, new regulatory capital requirements commonly referred to as “Basel III” were implemented and are reflected in the capital table above. 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.

Implementation of the deductions and other adjustments to Common Equity Tier 1 (CET1) began on January 1, 2015, and will phase in over a four-year period (beginning at 40% on January 1, 2015, with an additional 20% per year thereafter).  Under the new rule, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements.  The implementation of the capital conservation buffer began on January 1, 2016, at the 0.625% level and will phase in over a four-year period (increasing by that amount on each subsequent January 1 until it reaches 2.5% on January 1, 2019). The above capital ratio requirements table excludes the capital conservation buffer.