Regulatory Capital Matters

6 Months Ended

Jun. 30, 2016

Regulatory Capital Matters

Regulatory Capital Matters

Note 7 — Regulatory Capital Matters

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action.  Management believes as of June 30, 2016 and December 31, 2015, the Company and Citizens First Bank, Inc. met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications:  well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If adequately capitalized, regulatory approval is required to accept brokered deposits.  If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.  The most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the institution’s category.

Under quantitative measures established by regulation to ensure capital adequacy, we are required to maintain minimum amounts and ratios of total Tier 1 capital to risk-weighted assets and to total assets. For 2016, interim Final Basel III rules require the Bank to maintain minimum amounts and ratios of common equity Tier I capital to risk-weighted assets. Under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in computing regulatory capital. The rules also established a “capital conservation buffer” of 2.5%, to be phased in through January 1, 2019, above the new regulatory minimum risk-based capital ratios. The buffer could limit the payment of dividends and discretionary bonuses to officers if a bank fails to maintain required capital levels.

The Company’s and Citizens First Bank, Inc.’s actual capital amounts and ratios are also presented in the following table.

June 30, 2016

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$	46,518	12.64	%	$	29,448	8.0	%	N/A		N/A
Citizens First Bank, Inc.	47,162		12.82	%	29,440		8.0	%	$	36,800	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	41,908		11.38	%	22,086		6.0	%	N/A		N/A
Citizens First Bank, Inc.	42,554		11.56	%	22,080		6.0	%	29,440		8.0	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated	29,647		8.05	%	16,565		4.5	%	N/A		N/A
Citizens First Bank, Inc.	42,554		11.56	%	16,560		4.5	%	23,920		6.5	%
Tier I Leverage Capital to average assets
Consolidated	41,908		9.63	%	17,400		4.0	%	N/A		N/A
Citizens First Bank, Inc.	42,554		9.79	%	17,394		4.0	%	21,742		5.0	%

December 31, 2015

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$	44,762	12.58	%	$	28,463	8.0	%	N/A		N/A
Citizens First Bank, Inc.	46,353		13.03	%	28,459		8.0	%	$	35,573	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	40,310		11.33	%	21,348		6.0	%	N/A		N/A
Citizens First Bank, Inc.	41,901		11.78	%	21,344		6.0	%	28,459		8.0	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated	27,650		7.77	%	16,011		4.5	%	N/A		N/A
Citizens First Bank, Inc.	41,901		11.78	%	16,008		4.5	%	23,123		6.5	%
Tier I Leverage Capital to average assets
Consolidated	39,365		9.46	%	13,961		4.0	%	N/A		N/A
Citizens First Bank, Inc.	41,901		9.83	%	17,043		4.0	%	21,304		5.0	%