Note 4 - Regulatory Matters

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note

4:

Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the 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 the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Bank’s regulators could require adjustments to regulatory capital

not

reflected in these financial statements.

At

June 30, 2017

and

December 31, 2016,

quantitative measures established by regulation to ensure capital adequacy requires the Bank to maintain minimum amounts and ratios (set forth in the table below), of total capital, Tier

1

capital and common equity Tier

1

capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier

1

leverage capital to average total assets.

Basel III was effective for the Company on

January 1, 2015.

Basel III requires the Company and the Bank to maintain minimum amounts and ratios of common equity Tier

1

capital to risk weighted assets, as defined in the regulation. Under the new Basel III rules, in order to avoid limitations on capital distributions, including dividends, the Company must hold a capital conservation buffer above the adequately capitalized common equity Tier

1

capital to risk-weighted assets ratio. The capital conservation buffer is being phased in from

zero

percent to

2.50

percent by

2019.

Under Basel III, the Company and Bank elected to opt-out of including accumulated other comprehensive income in

regulatory capital.

Management believes, as of

June 30, 2017 (

unaudited) and

December 31, 2016,

that the Bank meets all capital adequacy requirements to which it is subject.

As of

June 30, 2017 (

unaudited) and

December 31, 2016,

the most recent notification categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage capital ratios as set forth in the table. There are

no

conditions or events since that notification that management believes have changed the Bank’s category.

The Bank

’s actual capital amounts and ratios are presented in the following table:

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
As of June 30, 2017
Total Capital
(to Risk-Weighted Assets)	$	14,639		17.1	%	$	6,849		8.0	%	$	8,561		10.0	%
Tier 1 Capital
(to Risk-Weighted Assets)	$	13,569		15.9	%	$	5,136		6.0	%	$	6,849		8.0	%
Common Equity Tier I Capital
(to Risk-Weighted Assets)	$	13,569		15.9	%	$	3,852		4.5	%	$	5,565		6.5	%
Tier I Leverage Capital
(to Average Total Assets)	$	13,569		11.5	%	$	4,715		4.0	%	$	5,894		5.0	%
As of December 31, 2016
Total Capital
(to Risk-Weighted Assets)	$	13,943		17.6	%	$	6,327		8.0	%	$	7,908		10.0	%
Tier I Capital
(to Risk-Weighted Assets)	$	12,954		16.4	%	$	4,745		6.0	%	$	6,327		8.0	%
Common Equity Tier I Capital
(to Risk-Weighted Assets)	$	12,954		16.4	%	$	3,559		4.5	%	$	5,140		6.5	%
Tier I Capital
(to Total Assets)	$	12,954		12.9	%	$	4,024		4.0	%	$	5,030		5.0	%