CAPITAL

6 Months Ended

Jun. 30, 2019

Capital [Abstract]

CAPITAL

NOTE 4 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 ratios of Tier 1 and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 1250%. Tier 1 capital consists of common stockholders’ equity, excluding the unrealized gain or loss on securities available-for-sale, minus certain intangible assets. Tier 2 capital consists of the allowance for loan losses subject to certain limitations. Total capital for purposes of computing the capital ratios consists of the sum of Tier 1 and Tier 2 capital. The Bank is also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio.

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’s actual capital amounts and ratios are presented in the following table as of June 30, 2019 and December 31, 2018, respectively. These ratios comply with Federal Reserve rules to align with the Basel III Capital requirements effective January 1, 2015.

							Minimum to Be Well
							Capitalized Under
							Prompt Corrective
		Actual		Minimum Capital Requirement			Action Provisions
(Dollars are in thousands)		Amount	Ratio	Amount		Ratio	Amount		Ratio
June 30, 2019:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	70,635	14.70%	$	38,453	8.0%	$	48,066	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		65,447	13.62%		28,840	6.0%		38,453	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		65,447	9.25%		28,312	4.0%		35,390	5.0%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
New Peoples Bank, Inc.		65,447	13.62%		21,630	4.5%		31,243	6.5%
December 31, 2018:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	70,002	14.39%	$	38,912	8.0%	$	48,640	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		64,666	13.29%		29,184	6.0%		38,912	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		64,666	9.59%		26,960	4.0%		33,700	5.0%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
New Peoples Bank, Inc.		64,666	13.29%		21,888	4.5%		31,616	6.5%

As of June 30, 2019, 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 were no subsequent conditions or events that management believes have changed the Bank’s category.

Under Basel III Capital requirements, a capital conservation buffer of 0.625% became effective beginning on January 1, 2016. The capital conservation buffer was gradually increased through January 1, 2019 to 2.50%. Banks are now 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. The Bank’s capital conservation buffer is 6.70% as of June 30, 2019.