CAPITAL AND REGULATORY MATTERS

3 Months Ended

Mar. 31, 2022

CAPITAL AND REGULATORY MATTERS [Abstract]

CAPITAL AND REGULATORY MATTERS

9.  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) introduced a new capital measure called Common Equity Tier 1 (“CET1”), (ii) specified that Tier 1 capital consists of CET1 and Additional Tier 1 Capital instruments meeting specified requirements, (iii) defined CET1 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) expanded 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.

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 March 31, 2022 and December 31, 2021, that the Company and its bank subsidiary met all capital adequacy requirements to which they are subject.

As of March 31, 2022, 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 March 31, 2022 that management believes have changed the bank subsidiary’s category.

The Company and its bank subsidiary’s actual capital amounts and ratios at the dates indicated follows (dollars in thousands):

	Actual					Minimum Required Under BASEL III Fully Phased-In					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2022
Total Capital to Risk Weighted Assets:
Consolidated	$	535,998		18.22	%	$	308,961		10.50	%		N/A		N/A
City Bank		431,140		14.66	%		308,882		10.50	%	$	294,173		10.00	%
Tier I Capital to Risk Weighted Assets:
Consolidated		423,358		14.39	%		250,111		8.50	%		N/A		N/A
City Bank		394,331		13.40	%		250,047		8.50	%		235,338		8.00	%
Common Equity Tier 1 to Risk Weighted Assets:
Consolidated		378,358		12.86	%		205,974		7.00	%		N/A		N/A
City Bank		394,331		13.40	%		205,921		7.00	%		191,212		6.50	%
Tier I Capital to Average Assets:
Consolidated		423,358		10.78	%		158,049		4.00	%		N/A		N/A
City Bank		394,331		10.05	%		157,958		4.00	%		196,196		5.00	%
December 31, 2021
Total Capital to Risk Weighted Assets:
Consolidated	$	524,836		18.40	%	$	299,521		10.50	%		N/A		N/A
City Bank		425,748		14.93	%		299,465		10.50	%	$	285,205		10.00	%
Tier I Capital to Risk Weighted Assets:
Consolidated		413,322		14.49	%		242,469		8.50	%		N/A		N/A
City Bank		390,015		13.67	%		242,424		8.50	%		228,164		8.00	%
Common Equity Tier 1 to Risk Weighted Assets:
Consolidated		368,322		12.91	%		199,681		7.00	%		N/A		N/A
City Bank		390,015		13.67	%		199,644		7.00	%		185,383		6.50	%
Tier I Capital to Average Assets:
Consolidated		413,322		10.77	%		154,592		4.00	%		N/A		N/A
City Bank		390,015		10.16	%		154,503		4.00	%		191,859		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.