22. CAPITAL

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

22. CAPITAL

NOTE 22 CAPITAL:

Capital Requirements and Ratios

The Bank is subject to various capital requirements administered by 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 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.

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 1 capital (as defined) to risk-weighted assets (as defined), Tier 1 capital (as defined) to average assets (as defined), and Common Equity Tier 1 capital (as defined) to risk-weighted assets (as defined). As of December 31, 2016, the Bank meets all capital adequacy requirements to which it is subject.

The Company meets eligibility criteria of a small bank holding company in accordance with the Federal Reserve Board’s Small Bank Holding Company Policy Statement issued in February 2015, and is no longer obligated to report consolidated regulatory capital. The Bank continues to be subject to various capital requirements administered by banking agencies. The Bank’s actual capital amounts and ratios are presented in the following table as of December 31, 2016 and 2015, respectively. These ratios comply with Federal Reserve rules to align with the Basel III Capital requirements effective January 1, 2015.

		Actual		Minimum Capital Requirement			Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars are in thousands)	Amount		Ratio	Amount	Ratio		Amount	Ratio
December 31, 2016:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	67,549	16.64%	$   32,476	8.0%	$	40,595	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		62,462	15.39%	24,357	6.0%		32,476	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		62,462	9.93%	25,149	4.0%		31,436	5.0%
Common Equity Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		62,462	15.39%	18,268	4.5%		26,386	6.5%
December 31, 2015:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	65,713	17.55%	$              29,954	8.0%	$	37,443	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		60,998	16.29%	22,466	6.0%		29,954	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		60,998	9.67%	25,239	4.0%		31,549	5.0%
Common Equity Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		60,998	16.29%	16,849	4.5%		24,338	6.5%

As of December 31, 2016, the Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage, and Common Equity Tier 1 ratios as set forth in the above tables. There are no conditions or events since the notification that management believes have changed the Bank’s category.

Under Basel III Capital requirements, beginning January 1, 2016, a capital conservation buffer of 0.625% became effective. The capital conservation buffer will be gradually increased through January 1, 2019 to 2.5%. Banks will be required to maintain levels that meet the required minimum plus the capital conservation buffer in order to make distributions, such as dividends, or discretionary bonus payments.

Board of Directors Exercise of Common Stock Warrants

During the month of October 2015, a member of the board of directors of the Company and his family exercised 233,886 common stock warrants at a price of $1.75 per share. During the month of November 2015, another member of the board of directors of the Company exercised 225,000 common stock warrants at a price of $1.75 per share. During the month of December 2015, another member of the board of directors of the Company and his family exercised 16,542 common stock warrants at a price of $1.75 per share. As a result of these exercises an additional $832 thousand of capital was raised by the Company. The additional liquidity provided by the funds will be used by the Company to pay its operating expenses and trust preferred interest payments.

Common Stock Warrants

As of December 31, 2016, 881,978 common stock warrants were outstanding as compared to 882,353 common stock warrants as of December 31, 2015. During 2016, 375 of the common stock warrants were exercised at a price of $1.75. As noted above, during 2015, 475,428 of common stock warrants were exercised at a price of $1.75. A summary of common stock warrants outstanding at December 31, 2016 follows:

Expiration Date		Exercise Price	Number Outstanding And Exercisable	Weighted Average Remaining Contractual Life
December 20, 2017	$	1.75	881,978	0.97 years
		Totals	881,978	0.97 years