CAPITAL AND REGULATORY MATTERS

12 Months Ended

Dec. 31, 2020

CAPITAL AND REGULATORY MATTERS [Abstract]

CAPITAL AND REGULATORY MATTERS

15. CAPITAL AND REGULATORY MATTERS

The Company and its bank subsidiary are subject to various regulatory capital requirements administered by its banking regulators. 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 its bank subsidiary’s financial statements. Under capital guidelines and the regulatory framework for prompt corrective action, the Company and its bank subsidiary must meet specific capital guidelines that involve quantitative measures of their 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. Prompt corrective action provisions are not applicable to bank holding companies.

In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (Basel III). Basel III, among other things, (i) introduces a new capital measure called Common Equity Tier 1 (“CET1”), (ii) specifies that Tier 1 capital consists of CET1 and Additional Tier 1 Capital instruments meeting specified requirements, (iii) defines Common Equity Tier 1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expands the scope of the deductions/adjustments as compared to existing regulations. Basel III became effective for the Company and its bank subsidiary on January 1, 2016 with certain transition provisions fully phased-in on January 1, 2019. The Company was in compliance with the fully phased in requirements at December 31, 2020.

Quantitative measures established by regulation to ensure capital adequacy require the Company and its bank subsidiary to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2020 and 2019, that the Company and its bank subsidiary met all capital adequacy requirements to which they are subject.

As of December 31, 2020, the bank subsidiary 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, and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since December 31, 2020 that management believes have changed the bank subsidiary’s category.

The Company and its bank subsidiary’s actual capital amounts and ratios follow:

	Actual					Minimum Required Under BASEL III Fully Phased-In					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2020:
Total Capital to Risk Weighted Assets:
Consolidated	$	473,425		19.08	%	$	260,531		10.50	%		N/A		N/A
City Bank		404,138		16.29	%		260,481		10.50	%	$	248,077		10.00	%
Tier I Capital to Risk Weighted Assets:
Consolidated		366,639		14.78	%		210,906		8.50	%		N/A		N/A
City Bank		372,947		15.03	%		210,866		8.50	%		198,462		8.00	%
Common Tier 1 (CET1):
Consolidated		321,639		12.96	%		173,688		7.00	%		N/A		N/A
City Bank		372,947		15.03	%		173,654		7.00	%		161,250		6.50	%
Tier I Capital to Average Assets:
Consolidated		366,639		10.24	%		144,347		4.00	%		N/A		N/A
City Bank		372,947		10.42	%		144,282		4.00	%		178,999		5.00	%

December 31, 2019:
Total Capital to Risk Weighted Assets:
Consolidated	$	373,684	14.88	%	$	263,769	10.50	%		N/A	N/A
City Bank		368,322	14.67	%		263,702	10.50	%	$	251,145	10.00	%
Tier I Capital to Risk Weighted Assets:
Consolidated		322,835	12.85	%		213,527	8.50	%		N/A	N/A
City Bank		343,945	13.70	%		213,473	8.50	%		200,916	8.00	%
Common Tier 1 (CET1):
Consolidated		277,835	11.06	%		175,846	7.00	%		N/A	N/A
City Bank		343,945	13.70	%		175,801	7.00	%		163,244	6.50	%
Tier I Capital to Average Assets:
Consolidated		322,835	10.74	%		120,219	4.00	%		N/A	N/A
City Bank		343,945	11.45	%		121,235	4.00	%		150,175	5.00	%

State banking regulations place certain restrictions on dividends paid by banks to their shareholders. Dividends paid by the Company’s bank subsidiary would be prohibited if the effect thereof would cause the bank subsidiary’s capital to be reduced below applicable minimum capital requirements.